5 Best Value Stocks to Buy Now

In this article, we discuss 5 best value stocks according to hedge funds. If you want to read about some more stocks that hedge funds like, the risk/reward and methodology of this list, go directly to 10 Best Value Stocks to Buy Now. 

5. Johnson & Johnson (NYSE:JNJ)

Number of Hedge Fund Holders: 83

Johnson & Johnson (NYSE:JNJ), a market-leading healthcare conglomerate, is considered a value stock by many investors given its forward P/E ratio of 15.37. Although rising interest rates could lower earnings valuations, Johnson & Johnson (NYSE:JNJ) has pricing power that could increase earnings. 

For its fiscal 2022 second quarter results, the company surpassed the Wall Street consensus by $195.47 million and earned revenue of $24.02 billion, an increase of 3.04% year over year. The company’s $2.59 earnings per share beat the forecasts by $0.04.

At the end of the second quarter of 2022, 83 hedge funds were bullish on Johnson & Johnson (NYSE:JNJ) and held stakes worth $6.76 billion.

Here is what asset management firm, Mayar Capital, had to say about Johnson & Johson (NYSE:JNJ) in its second-quarter 2022 investor letter:

J&J is currently our largest position and a long-standing holding. The majority of the group’s sales comes from its collection of pharmaceutical franchises, but a large majority (~45%) comes from its collection of medical device businesses and its consumer brands.

Here’s how JNJ make and spend a dollar of revenues: As of 2021, about 55 cents of that dollar comes from its pharmaceutical sales – sales of drugs to pharmacies and distributors – while 30 cents come from the sale of medical devices, such as surgery equipment and orthopaedics. The rest of that dollar in sales comes from sales of JNJ’s consumer brands such as Listerine mouthwash, Nicorette nicotine tablets and Neutrogena cosmetics.

To make that dollar, however, JNJ typically spends about 25 cents to make the products themselves and another 27 cents on marketing and general administrative functions. This leaves JNJ with about 48 cents on the dollar in profit…(Click here to see the full text).