Boston, MA 04/10/2014 (wallstreetpr) – Johnson & Johnson (NYSE:JNJ) is a diversified company. The company’s diversification is a reason for its consistent and always huge profits. However, it seems that not many investors already understand this blue chip stock.
Talk about diversification and you find that, for JNJ, there are always other products to make a difference when one or two are struggling. The strength in the company is in its ability to post consistent and solid annual profits on average 10 percent over the past 15 years.
Good revenue stream
Johnson & Johnson (NYSE:JNJ) operates three business segments namely Medical Devices, Pharmaceutical and Consumer. The largest segment is Medical Devices that contributes about 40 percent of the company’s revenue.
Due to its product diversification, JNJ boasts bigger return on investment than its competitors. With a return on capital of 15 percent, the company is ahead of Medtronic Inc (NYSE:MDT) at 13 percent, Bristol-Myers Squibb (NYSE:BMY) at 10 percent and Pfizer Inc (NYSE:PFE) at 5 percent, just to mention a few.
Strong growth prospects
Johnson & Johnson (NYSE:JNJ) is poised to benefit from the aging world population which is expected to increase spending on health care. Also, the company’s strong product pipeline puts it in a position to generate incremental revenue going forward.
As the world gets older, demand for medical devices and pharmaceuticals are expected to go up, and these are areas where JNJ already thrives. The company has new products expected to roll out of its Pharmaceuticals and Medical Devices segments. Talk about the Pharmaceuticals segment and the company had the European regulators recommending authorization of its Type 2 diabetes drug Vokanamet. Moreover, FDA approved the company’s treatment for heart disorder called SmartTouch Catheter. There are more products in the pipeline.
Strategic acquisitions
In conclusion, Johnson & Johnson (NYSE:JNJ) is not just looking to its internal products, the company is also putting its solid financial position to work. It is acquiring smaller biotechs with promising products, for example, it has an interest in Alector, that is developing treatment for Alzheimer’s disease.
All in all, Johnson & Johnson (NYSE:JNJ) seems to offer a rare strong investment opportunity.
