Johnson & Johnson (JNJ)

It boils down to the talc-asbestos lawsuit, an overhang that led him to sell his shares earlier.

It sold off the personal care products division and kept the pharmaceutical and medical devices ones. He likes these two areas that they have kept and there is the opportunity for decent acquisitions in both. There is a law suit but these can take a long time in the U.S. and often get settled out of court. It has a good balance sheet, has regularly increased its dividend for a long time, and is cheap at 14X earnings.
Buy 10  Hold 17  Sell 1

Spinoff of consumer products division recently completed.
Owned shares for many years, and will continue to own.
Renewed guidance on business expected at the month.
EPS ($10.75) will not change too much going forward.
Dividend safe. 
Expecting demand for healthcare business to increase.
Very strong balance sheet that is AAA rated.

A good mix of consumer goods and healthcare, but the PE is extended. Prefers to buy Pfizer for its growth and lower PE. He might even roll the dice with Moderna. Or buy the IBB, biotech ETF.

This is a core holding. It is a pharmaceutical and medical devices company. There has been some mild concern about a bit of a patent cliff and asbestos claims from a baby powder product. However it is a defensive company with a solid balance sheet and Triple A rating. There is a spinoff coming which will be available to shareholders. When asked about Lilly, he prefers Johnson and Johnson.

Underperformed recently. Medical devices will continue to do well, mainly because of backlog on surgeries. Pharma business has great opportunities. Ongoing increases to dividend, over 60 years straight. Great balance sheet, lots of cash to deploy. Spinoff of consumer division should boost stock. Yield is 2.72%.

Recent litigation issues not a concern ($ 9 billion set aside).
Consumer products spinoff a good decision.
Transitioning into pharma & medical supply business.
16x earnings at current share price - excellent time to buy. 
60 consecutive years of dividend increases.
Good for defensive investors.

It recently broke out. He hopes it breaks $181. The fundamentals look good.

He didn't sell it because of its fundamentals. It has a fine pharma pipeline and medical devices business. He sold because JNJ is knee-deep in  lawsuits over its baby powder causing cancer (talc allegedly containing traces of asbestos). At first, he gave JNJ the benefit of the doubt, but since then the lawsuits keep coming and JNJ has lost some, including a $2 billion judgement. He felt hopeful when JNJ offered to settle in North America by paying $8.9 billion. Then JNJ reported a terrific quarter and spun off a business. But overall, you don't want to bet on litigation and he admits he was too sanguine about these lawsuits. Last Friday, a judge ruled that JNJ didn't have the right to settle all these lawsuits in bankruptcy, because the company was not in financial distress. It's not worth it to hope that down the road JNJ wins in the supreme court. Hope should not be part of the investing equation. There's no telling how bad all these lawsuits could be on JNJ. He bets on businesses, now lawsuits.

The caller was wondering whether to sell Johnson and Johnson and buy Stryker. Both are good companies and good for recessionary times. Johnson and Johnson is a consumer staple which sometimes has trouble with margins. He owns Stryker, a well run company.

It has been bouncing off the support line and he recently bought it. It is a safe stock to hold during what could be a volatile summer on the stock markets. If it goes to $170 or even $180 he would trade it.

Spun out consumer products, but still owns 90% of it. Can use cash from that deal to grow the pharma and medical devices divisions. 15x earnings. Increased dividend for 54 years. Will eventually settle the talc lawsuits. Underperformed this year, so a great time to buy at these levels. Yield is 2.93%.

Not worried about their drug pipeline, but some existing ones will be going off-patent. There will be a lag and the current underperformance reflects some concerns. Also are settling their talcum powder litigation. Valuation and 3.5% dividend are attractive. Strong balance sheet. Relative safe heading into an economic downturn. Will spin off their consumer products division.