No More Tears

Remember when your mom told you to eat your vegetables? "They're boring but good for you," she'd insist while you eyed that chocolate cake across the room.

Well, in today's market, Johnson & Johnson (JNJ) is that plate of nutritious broccoli – not the sexiest option on the table, but exactly what your financial diet needs.

And if Q1 earnings are any indication, this particular vegetable is secretly packed with more flavor than the market gave it credit for.

Their recent earnings report confirms what I've been telling anyone who would listen: this pharmaceutical tortoise is quietly outpacing flashier hares.

Sales increased 2.4% year-over-year to $21.9 billion, exceeding analyst expectations and demonstrating that steady growth doesn't need to make headlines to fill portfolios.

While the headline diluted EPS was an eye-popping $4.54 (up over 235%), those savvy enough will look at the adjusted figure of $2.77 (excluding one-time charges) for a more realistic picture of operational performance.

Diving deeper into the numbers reveals a company firing on multiple cylinders.

The MedTech division grew 4.1% to $8 billion, with cardiovascular products leading the charge at 17.7% growth.

Meanwhile, Pharmaceuticals grew 4.2% to $13.87 billion, with oncology growing an impressive 20% to $5.68 billion.

Multiple myeloma therapy Darzalex continues its blockbuster trajectory at $3.24 billion, while the approval of Rybrevant in non-small-cell lung cancer adds yet another potential multi-billion dollar earner to the medicine cabinet.

Now, let's talk about pharmaceutical patent cliffs.

Stelara, JNJ's immunology golden goose, is mid-plummet, with Q1 revenues down 33% to $1.63 billion. As expected, though, JNJ has been quietly lining up replacements.

Their immunology bullpen includes nipocalimab (sporting FDA Fast Track status) and icotrokinra (which cleared skin in 84% of adolescent psoriasis patients).

You can actually practically smell the confidence wafting from management's quarterly statements.

They've bumped their full-year revenue guidance to $91.6-$92.4 billion and hiked the quarterly dividend by 4.8% to $1.30 per share. That makes 63 consecutive years of dividend increases.

I'd be remiss not to mention the twin storm clouds hovering over our healthcare heavyweight.

First, there's the $6.97 billion charge for talc lawsuits after a bankruptcy judge essentially told JNJ their "Texas two-step" legal maneuver was more of a stumble.

Second, the Trump administration's threatened 25% pharmaceutical tariffs. With roughly 44% of Q1 revenues coming from overseas ($9.6 billion compared to $12.3 billion domestic), JNJ isn't completely sheltered from cross-border economic squabbles.

But here's where JNJ's strategic thinking earns my respect: they're doubling down on America with a $55 billion U.S. expansion planned over the next four years.

Back when I was launching hedge funds in the late '80s, I quickly learned to separate companies that merely react to policy changes from those that anticipate and adapt. JNJ falls firmly in the latter category.

For the number-crunchers among you (my people!), JNJ trades at 25.6 times earnings with a price-to-free-cash-flow ratio of 19.95. I ran this through my DCF model using a 10% discount rate.

The math suggests JNJ needs approximately 5% annual free cash flow growth to justify today's price.

With MedTech projected to grow 5-7% annually and Pharmaceuticals showing similar potential, plus those steady share buybacks reducing the float at 1.14% yearly, my spreadsheets spit out an intrinsic value of about $168.39 per share – roughly 7% above where we stand today.

Not a screaming bargain, but a fair price for a company that's mastered the art of sustainable growth.

JNJ won't make you the star of your next cocktail party investment brag-fest. But when markets start convulsing like they've touched a live wire, these steady healthcare veterans tend to keep their vital signs stable.

While your trendier holdings might need intensive care during volatility, JNJ has spent over a century perfecting the art of financial first aid.

In a market that often leaves investors reaching for tissues, JNJ's steady performance lives up to its most famous promise: no more tears.