We recently published a list of the 11 Cheap NYSE Stocks to Invest in According to Hedge Funds. In this article, we are going to take a look at where Johnson & Johnson (NYSE:JNJ) stands against other cheap NYSE stocks.
On March 26, Jack Caffrey of JPMorgan Asset Management provided an analysis of market trends in a discussion on CNBC’s ‘Squawk Box’. He emphasized diversified portfolios built around different exposures during periods of volatility. Caffrey believes in the importance of ‘time in the market’ over ‘timing the market’. He highlighted the difficulty in predicting when fear or euphoria will dominate, as some of the best market days follow extreme pessimism. Caffrey also discussed the October sell-offs in 2022 and 2023, where many strategists expected further market tests at levels like 3200 or 3300 on the S&P 500. However, instead of panic selling, the market experienced rebounds in 2023 and 2024. He observed that implied volatility reached the high 20s during recent corrections, but did not indicate widespread panic.
Caffrey also discussed how the MAG7 drives market trends. While these stocks led growth in early 2020, their momentum eventually faded. This led to corrections instead of broadening. Investors began exploring second and third derivative trades stemming from AI developments, such as increased electricity demand and improvements in natural gas markets. He noted that mean reversion often occurs when primary trades become well-understood and widely owned. He suggested that markets would likely be led by earnings rather than valuation. Caffrey acknowledged that while some stocks within the MAG7 have posted earnings growth that makes their valuations more reasonable, traders are increasingly seeking opportunities in overlooked sectors like energy and businesses benefiting from a weaker dollar. For instance, oil prices have remained down despite energy leading the market performance this year.
Stimulus measures in Europe are also shifting from monetary to fiscal policies, which creates additional opportunities for investors.
Our Methodology
We sifted through the Finviz stock screener to compile a list of the top NYSE-listed stocks. We then selected the 11 stocks with a forward P/E ratio under 15, as of April 8, that were also the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A smiling baby with an array of baby care products in the foreground.
Johnson & Johnson (NYSE:JNJ)
Forward P/E Ratio as of April 8: 14.24
Number of Hedge Fund Holders: 98
Johnson & Johnson (NYSE:JNJ) engages in the R&D, manufacture, and sale of various products in the healthcare field through the Innovative Medicine and MedTech segments. It distributes its products to wholesalers, hospitals, and retailers, as well as physicians, nurses, hospitals, eye care professionals, and clinics.
In 2024, the company’s operational sales surged by a 7% year-over-year increase, excluding the impact of COVID-19 vaccine. The company’s total number of billion-dollar revenue platforms is now 26, including the recent addition of SPRAVATO. Its Innovative Medicine segment exceeded $14 billion in sales for the third consecutive quarter, with 10 brands achieving double-digit growth. A focus on cash flow helped the company generate about $20 billion in free cash flow by the end of 2024, which was an increase of $1.6 billion year-over-year.
As March was concluding, Johnson & Johnson (NYSE:JNJ) announced plans to invest more than $55 billion in US manufacturing, R&D, and technology over the next 4 years. This is 25% higher from the previous investment period. These investments could potentially contribute ~$100 billion annually to the US economy. On April 4, UBS reaffirmed its Buy rating and $180 price target on the company due to its strong core business. The firm highlighted a 14% sequential rise in total prescription growth for Tremfya, which is its drug for plaque psoriasis and psoriatic arthritis.
Overall, JNJ ranks 7th on our list of cheap NYSE stocks to invest in according to hedge funds. While we acknowledge the growth potential of JNJ, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than JNJ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.