We recently published a list of 10 Worst Performing Dow Stocks Year-to-Date. In this article, we are going to take a look at where Johnson & Johnson (NYSE:JNJ) stands against other worst performing Dow stocks year-to-date.
After the disastrous performance of 2022, the market has recovered better than expected and is on a growth trajectory. According to BlackRock’s Q4 2024 Equity Market Outlook, despite concerns about the economy, fundamentals have kept stocks resilient. Opportunities are seen in large-cap stocks, which may outperform both mega and small caps.
Volatility is viewed as normal and can create buying opportunities, especially when driven by market sentiment rather than fundamentals. Historically, market corrections of 10% or more are common but long-term investors have still enjoyed solid returns.
The report states that elections and Fed rate cuts may also impact the market, with rate cuts typically benefiting large-cap and high-quality stocks. Healthcare and consumer staples sectors have traditionally performed well after rate cuts, while cyclical sectors may improve as the economy recovers.
Finally, it mentioned that technology, which is usually a laggard in rate-cutting cycles, looks well-positioned this time due to innovations like AI. Long-term patience is essential in navigating volatility, as the market has proven resilient over decades through various crises.
READ ALSO: 8 Best Communication Stocks To Buy According to Analysts and 10 Worst Performing Blue Chip Stocks in 2024
Evaluating Volatility and Valuations in Today’s Stock Market
In a CNBC interview, chief strategist and economist of Solus Alternative Asset, Dan Greenhaus discussed stock market volatility, with mega-cap earnings and the upcoming election contributing to potential fluctuations. He mentioned that the market is already experiencing some volatility, as reflected in the elevated VIX. Despite this, he highlighted that the economy is still growing, albeit at a slower pace, and earnings are rising, which is creating a generally favorable environment for equities.
Greenhaus also addressed concerns about market valuations and noted that while current multiples are high historically, determining what constitutes “rich” valuation levels can be difficult without hindsight.
Lastly, Greenhaus referenced a trading strategy of “buying high and selling higher,” suggesting that investors should remain engaged in the market even during record highs.
Our Methodology
For this article, we checked the year-to-date performance of all the Dow components and selected 10 stocks out of 30, that had the worst share price performance on a year-to-date basis on October 21. We listed the stocks in descending order of their share price performance. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s Q2 database of 912 elite hedge funds.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A smiling baby with an array of baby care products in the foreground.
Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 80
Share Price Performance Year-to-Date: 1.79%
One of the worst performing Dow stocks, Johnson & Johnson (NYSE:JNJ) is an American multinational in pharmaceuticals, biotechnology, and medical technologies company. The company has made significant contributions to healthcare, pioneering sterile surgical products and the first commercial first aid kit. It has a history of innovation, including the invention of the Band-Aid in 1920 and several surgical technologies.
Johnson & Johnson (NYSE:JNJ) is dealing with over 62,000 lawsuits alleging that its talc products, including baby powder, is contaminated with asbestos and cause health issues like ovarian cancer. To handle these legal challenges, its subsidiary, Red River Talc, filed for bankruptcy as part of a strategy to address the claims.
The company, maintaining that its products are safe, has proposed a nearly $10 billion settlement. However, opponents of the plan are challenging the bankruptcy, potentially moving the case to New Jersey.
The company continues to face uncertainty over ongoing talc litigation, which has weighed on its stock performance. The company’s latest effort to resolve these liabilities involves a third attempt to place its talc-related subsidiary into bankruptcy, this time in Texas, with support from 83% of plaintiffs. If successful, this move could ease investor concerns.
On a positive note, Johnson & Johnson (NYSE:JNJ) reported strong third-quarter earnings, with sales of $22.5 billion, a 5.2% increase from the previous year, and adjusted earnings of $2.42 per share, exceeding analysts’ estimates by $0.21.
The acquisitions of Shockwave, V-Wave, and others have strengthened the MedTech and Innovative Medicine segments. Key medicines like DARZALEX, which surpassed $3 billion in sales and became the company’s first product to do so in a single quarter. The launch of new therapies such as RYBREVANT and TREMFYA, contributed significantly to this growth.
For 2025, Johnson & Johnson (NYSE:JNJ) is confident in continued growth for its Innovative Medicine segment, despite losses from STELARA biosimilar entries. Product contributions are expected from TREMFYA and RYBREVANT, with new approvals and pipeline progress across priority platforms.
Overall, JNJ ranks 6th on our list of worst performing dow stocks year-to-date. While we acknowledge the potential of JNJ as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. 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.