5 Best Psychedelic Stocks to Buy According to Hedge Funds

1. Johnson & Johnson (NYSE:JNJ)

Number of Hedge Fund Holders: 84

Johnson & Johnson (NYSE:JNJ) is an American multinational pharmaceutical company, which is also categorized as one of the best psychedelic stocks by smart investors. In March 2019, Johnson & Johnson’s (NYSE:JNJ) nasal spray called SPRAVATO (esketamine) became the first psychedelic drug to receive the FDA’s Breakthrough Therapy designation. The drug is used to treat depression that is resistant to other treatments.

On March 1, Guggenheim initiated coverage of Johnson & Johnson (NYSE:JNJ) with a Neutral rating and a $161 price target. While Guggenheim supports Johnson & Johnson (NYSE:JNJ)’s plan to separate its Consumer Health division and believes that its MedTech segment is showing positive signs of recovery, it is looking for more information about the outlook for its Pharma business. The firm is concerned about upcoming patent expirations, such as Stelara later this year, and has forecasted lower sales than management’s expectation of $60 billion in Pharma sales by 2025. The firm’s forecast is also lower than management’s expectations for several pipeline assets that they have touted as having potential for peak annual sales of $1 billion or $5 billion. 

According to Insider Monkey’s fourth quarter database, 84 hedge funds were long Johnson & Johnson (NYSE:JNJ), compared to 85 funds in the prior quarter. Ray Dalio’s Bridgewater Associates held a significant position in the company, comprising 3.5 million shares worth $630.2 million. 

In its Q2 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and Johnson & Johnson (NYSE:JNJ) was one of them. Here is what the fund said:

“Johnson & Johnson (NYSE:JNJ) is currently our largest position and a long-standing holding. The majority of the group’s sales comes from its collection of pharmaceutical franchises, but a large majority (~45%) comes from its collection of medical device businesses and its consumer brands.

Here’s how JNJ makes and spends a dollar of revenues: As of 2021, about 55 cents of that dollar comes from its pharmaceutical sales – sales of drugs to pharmacies and distributors – while 30 cents come from the sale of medical devices, such as surgery equipment and orthopedics. The rest of that dollar in sales comes from sales of JNJ’s consumer brands such as Listerine mouthwash, Nicorette nicotine tablets and Neutrogena cosmetics (…read more)

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