Johnson & Johnson (NYSE: JNJ)
Johnson & Johnson has had a rough time in the market throughout the year 2015. Unfortunately, the strong United States dollar has put quite a bit of pressure on the company. However, there are two big pieces of news that are likely to give JNJ a decent bump up in the market. The first revolves around a buyback and the second around the USD. Today, we’ll cover both topics and I’ll let you know what I believe we can expect from the stock moving forward.
The United States Dollar Is Starting To Weaken
As mentioned above, JNJ has had a rough time in the market throughout the past year, and much of the declines we’ve seen on the stock can be attributed to the strong US dollar. The reality is that when the value of the dollar rises and outpaces other currencies, US-made goods become more expensive in other economic regions. This leads to low sales abroad, as Johnson & Johnson can tell you. However, the poor sales abroad are likely to change relatively soon. That’s because the value of the USD has started to decline. With economic concerns revolving around jobs growth, consumer spending and global economic worries, the US economy doesn’t look as strong as it has. Ultimately this is leading to a declining currency, which is great for companies like Johnson & Johnson who do a large number of sales outside of the United States.
JNJ Has Big Buyback Plans!
Johnson & Johnson announced today that they plan on buying back about 3.7% of outstanding shares in the company. That works out to be a $10 billion buyback. This is a great time for JNJ and it’s investors with regard to the buyback. The reality is that over the past year the stock has been declining, bringing the value of JNJ down to a discounted rate. Knowing that the value of the dollar is declining, Johnson & Johnson knows that their sales are likely to pick up, which will cause investor excitement and improve investor sentiment. As a result, the value of the stock will increase. Since JNJ is buying back a decent percentage of outstanding shares, the growth will make the company strong for two reasons; first because the stock is going up, but also because they own more of their own stock. So, this is a great move for company-wide stability, longevity and investor sentiment!
What We Can Expect To See Moving Forward
At the time of writing this article, the markets haven’t opened quite yet. However, I’d imagine that JNJ is going to have a great day in the market after releasing this news. Also, I believe that the stock is likely to climb moving further than today. It’s no secret that Johnson & Johnson has become an incredible company with tons of incredible products. The only hiccup they’ve seen lately is the fact that the value of the USD has been too strong. However, that issue is slowly resolving itself. All in all, I have no reason to believe that the long term declines we’ve seen as of late are likely to continue. So, while the price is cheap, you may want to get in on this stock!
What Do You Think?
Where do you think JNJ is headed and why? Let us know in the comments below!
[Image Courtesy of Johnson & Johnson]