JNJ-Super company, Super stock! Message Board

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Biotech / Medical : JNJ-Super company, Super stock!

JNJ 188.87

-0.1%

Oct 31 9:30 AM EST

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To: muddphudd who wrote (474)	1/12/2004 9:26:07 AM
From: Lance Bredvold	Read Replies (1) of 552

No opinion regarding Topamax though I appreciate the article for its possible relevance to friends with migraine complaints and for general background at JNJ. The fact is that I don't try to keep up with all developments at JNJ (or similarly at GE) just because the job would be too unproductive in my opinion. That is, few properly answered questions would involve a big enough proportion of either company to make a significant difference. I was speaking from more specific knowledge applicable to a much smaller company which is more dependent on drug eluding stents. Thus, I've formed no opinion on Topamax or most other offerings from JNJ. Nor on the general value of expanding the uses for particular drugs. All companies try to do it, I expect JNJ will do a reasonably competent job, and how much benefit will ultimately derive from those types of efforts should be somewhat positive since they wouldn't engage in them if not. That is, of course, circular reasoning and all I'm prepared to do. I am reading the book "A Mathematician Plays the Stock Market" (sorry, but I don't know how to underline the title on this computer) and he brings up an interesting consideration regarding PE's. I am used to getting a backlash from posters when I say a PE of 15 is normal for JNJ. What the author pointed out to me is that the population of posters on JNJ boards is composed of people who like the company and see it's value as higher than the average investor. I was beginning a treatise on PE's and became entangled in pretty esoteric arguments of interest only to me no doubt. In general I shall continue to doubt my own sanity when I strongly feel my favorite stocks deserve a multiple higher than 20 no matter how many people I can find on their bulletin boards who can really make me feel this case is different. When a stock's price is bid up to a PE of 20, there is little the company can do to make more than 5% on the incremental investment in its stock. Earnings growth rates do need to be added to consideration to make that statement very worthwhile. (learning as I go,ggg). L.

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