Intuitive Surgical, Inc. (ISRG), Johnson & Johnson (JNJ): This Health Care Stock Isn’t Out of the Woods

Now, skittish investors may be looking for a safer health care play. One such stock that shell-shocked investors would be wise to consider now is Johnson & Johnson (NYSE:JNJ), which has a massive product portfolio that does include medical devices.

Fortunately for investors, Johnson & Johnson (NYSE:JNJ) has a broad product line that includes several well-known consumer brands, including Listerine and Band-Aids, which help solidify the company’s underlying results. Even under adverse economic conditions, Johnson & Johnson (NYSE:JNJ) provides the slow-and-steady results that its investors certainly appreciate. That’s a big reason why the company is one of only four stocks to hold the coveted triple-A credit rating from Standard and Poor’s.

Moreover, Johnson & Johnson (NYSE:JNJ) is perfect for more conservative investors because of its handsome dividend yield, which stands at approximately 3% at recent prices. That dividend has stood the test of time, serving as a testament to the company’s durability. Johnson & Johnson (NYSE:JNJ) recently raised its dividend for a spectacular 50 years in a row.

Reports of demise are greatly exaggerated

To be fair, it’s not as if Intuitive Surgical’s business is in free-fall. The company is still expecting sales growth in the second quarter, albeit at a rate far below what the market had expected.

Moreover, Intuitive Surgical is still seeing growth from its instruments, accessories, and services divisions. In the meantime, for investors who aren’t afraid to take risk, the massive drop in Intuitive Surgical shares may present a unique buying opportunity.

After the sell-off, shares now exchange hands for 25 times full year 2012 diluted earnings per share, so it’s hard to say the stock is cheap. Further multiple compression is a very likely scenario, especially now that the company’s growth trajectory has been dealt a hit.

For the time being, I’m taking a cautious view on Intuitive Surgical. I’d advise investors to take a similarly cautious view and wait for the dust to settle before jumping in.

Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Intuitive Surgical, Johnson & Johnson, and MAKO Surgical . The Motley Fool owns shares of Intuitive Surgical and Johnson & Johnson. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article This Health Care Stock Isn’t Out of the Woods originally appeared on Fool.com is written by Robert Ciura.

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