Johnson & Johnson (JNJ) is one of the premier blue-chip companies in the world. It is one of only four AAA rated corporations with headquarters in a country with a AA rated government. For much of the past two decades, Mr. Market has traditionally applied a premium valuation to this high-quality enterprise. However, Johnson & Johnson’s stock price began reverting to its mean earnings justified valuation in the spring of 2005. Then, following this initial shift in valuation reconciliation, the great recession of 2008 drove the stock price into undervalued territory. Since that time, Johnson & Johnson’s stock price has been tracking earnings but at an undervalued level.
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