Johnson & Johnson (JNJ) Stock Is Always a Buy (If You Hold Long Enough)

It’s hard to argue that Johnson & Johnson (NYSE:JNJ) stock is not a buy. Ever.

To prove my point, I looked at the multi-year chart and picked out some of the peaks. Even if you purchased near the yearly top, you’re still sitting on a better return than if you had purchased an S&P 500 ETF.

Date	Johnson & Johnson Dividend-Adjusted Return	S&P 500 Dividend-Adjusted Return
June 27, 2012	34.1%	23.7%
June 8, 2011	40.6%	31.6%
April 9, 2010	49.3%	44.2%
Aug. 8, 2008	43.6%	38.8%
Oct. 20, 2006	56.6%	35.7%

Source: S&P Capital IQ.

Of course, Johnson & Johnson stock is sometimes a better buy than at other times. If you purchased near the yearly lows, you’re sitting on an even better returns, trouncing the S&P500.

Date	Johnson & Johnson Dividend-Adjusted Return	S&P 500 Dividend-Adjusted Return
June 1, 2012	45.1%	29.2%
March 18, 2011	60.1%	32.3%
July 23, 2010	67.2%	55.4%

Source: S&P Capital IQ.

Run-up helped
The assumption that you’ll be OK buying almost anytime works only if you hold on to Johnson & Johnson (NYSE:JNJ) stock for long enough. I ran similar calculations looking at the returns through the end of last year, before Johnson & Johnson stock went on its monster run. The results weren’t nearly as pretty.

Date	Johnson & Johnson Dividend Adjusted Return Through Dec. 31, 2012	S&P 500 Dividend-Adjusted Return Through Dec. 31, 2012
June 27, 2012	6.8%	8.3%
June 8, 2011	11.9%	15.2%
April 9, 2010	18.8%	26.2%
Aug. 8, 2008	14.3%	21.5%
Oct. 20, 2006	24.7%	18.8%

Source: S&P Capital IQ.

Apart from for the longest holding period — the exception that proves the rule — the S&P 500 topped the returns for Johnson & Johnson.

Looking forward
I think the recent run-up is justified, given how pessimistic investors have been over the last few years as Johnson & Johnson (NYSE:JNJ) dealt with manufacturing issues and recalls. But I wouldn’t be surprised if were near a yearly high, given how much Johnson & Johnson stock has increased over the first half of the year.

Fortunately, there are a few upcoming events that could help Johnson & Johnson (NYSE:JNJ) stock increase in value, or at the very least help prop it up.

Second-quarter earnings are scheduled to be released on July 16. Investors should keep their eyes on Johnson & Johnson’s recently launched diabetes drug Invokana. If Johnson & Johnson can persuade doctors to give it a try, there’s potential for the drug to compete with Merck & Co., Inc. (NYSE:MRK)‘s top-selling oral medication Januvia. Taking just a portion of Januvia’s multibillion-dollar market would give Johnson & Johnson stock a nice boost.