The merits of Johnson & Johnson
The company is Johnson & Johnson
[NYSE:JNJ]. It’s one of the largest companies in the world. It’s a leader in consumer health care products, pharmaceuticals and medical devices.
Chances are you use some of its products whether it be baby products or contact lenses. Its share price reflects this. Since 2000, Johnson & Johnson shares have more than doubled in price.
But with the recent bouts of market volatility, investors have been selling their shares. A useful technical indicator to show this is the relative strength index (RSI).
Johnson & Johnson shares tend to rally from here
The RSI compares a stock’s recent gains and losses in its share price, as shown on a 0 to 100 index. A low RSI indicates a stock is oversold, whereas a high RSI indicates a stock is overbought.
At the end of last month, Johnson & Johnson looked extremely oversold. Since 2009, the start of the bull market in the US, it’s rarely been at these levels.
Have a look at the chart below…
Looking back at what’s happened in the past at these extreme oversold levels shows that buying is a good idea, Brett Eversole in Daily Wealth
explains. After each extreme, the share price went on to rise by 9.4% on average over the next three months.
Of course, you can’t know for certain that the share price will react like this, but when it’s been in extreme oversold territory before, it hasn’t made a loss over the next three months.
If you’re looking to add some offshore giants to your portfolio, now could be the time to consider buying some shares in Johnson & Johnson.
So there you have it. Why one of the top ten largest stocks in the world could be worth a buy.
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