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Johnson & Johnson (NYSE: JNJ) reported earnings Thursday, and the numbers were surprising.
J&J earned $3.63 billion, or $1.36 per share over the second quarter - a 35% drop from a year earlier. The coronavirus forced hospitals to postpone elective surgeries, which impacted the company's medical device business.
Truthfully, it wasn't as bad as it could be. The decline in medical sales was offset by an explosion in sales in the company's over-the-counter products like Tylenol.
And despite the drop in profit, the company did beat earnings expectations overall. J&J reported adjusted earnings of $1.67 per share, which was higher than the predicted $1.49 per share. CEO Alex Gorsky noted that the numbers posted prove the strength of the pharmaceutical industry during COVID-19's impact on the economy.
Once the earnings report was released and many saw the stock beat expectations, investors began to throw money into the stock - even though the company posted falling profits.
That seems to be the trend lately. Any stock that posts half-decent numbers has investors piling in. But the other reality is that the investors are moving money out of the stock just as quickly as they came in. And while J&J quickly moved up post-earnings, it sold off shortly after.
This sell-off could be investors taking their profits, but after watching this stock over the past few months, I believe that selling this stock so early wasn't the best move. I believe J&J is not only a buy right now, but a buy and hold.
And here's why...
JNJ Is a Buy
Here's the thing that most investors are missing as they sell this stock...
Since March, the stock is up 40%. That's why when the earnings reports rolled out, I wasn't surprised the company beat earnings. On top of this, after every pullback this stock has faced, it's been bought. In December 2018, the stock lost 13% only to climb back up in the weeks to follow. It repeated that move six months later.
And truthfully, amid the volatility, I believe any company that is linked to healthcare and a possible vaccine should be bought on pullbacks. Healthcare will be the industry that bounces back from the current crisis.
I see Johnson & Johnson as not only a safe investment, but one that could pay off in a big way. So, I'll be looking to add it to my line-up, and I think you should too.
And even though I see the volatility brought on by COVID-19 continuing, my S.C.A.N. trading system keeps filtering out the noise and locking in on the best profit opportunities in the markets.
In fact, for the crazy year that's been 2020, my readers and I have been able to generate an average return of over 88% on all closed positions.
With the markets looking more and more likely to maintain this roller-coaster pattern, there's never been a better time for you to join the rest of my Project 303 readers in securing opportunities for wins like this.
About the Author
Andrew Keene is a globally known trader and a renowned expert on all things options.