Johnson & Johnson (JNJ): A Good 52-Week High Stock to Buy According to Short Sellers

We recently compiled a list of the 14 Best 52-Week High Stocks to Buy According to Short Sellers. In this article, we are going to take a look at where Johnson & Johnson (NYSE:JNJ) stands against the other 52-week high stocks.

The U.S. stock market has been on a roll, with major indices clocking double-digit gains even with the U.S. economy showing signs of weakness. The gains have come from investors shrugging off the uncertainty around the U.S. presidential election and monetary policy to continue betting on various counters.

Consequently, the S&P 500 is already up more than 17% for the year, driven by gains in the communication services and financial services sectors. Likewise, technology stocks have also contributed to driving the overall market high as investors continue paying close attention to some of the big plays around artificial intelligence.

READ ALSO: 18 Best 52-Week Low Stocks to Buy Now According to Short Sellers and Top 10 ADR Stocks To Buy According to Hedge Funds.

The tech-heavy NASDAQ index, which gained 18% for the year, comes on growing expectations that the U.S. Federal Reserve has hit the peak of its monetary policy tightening spree. With expectations that the central bank will start cutting interest rates by as much as 50 basis points, according to CNBC, investors' sentiments around tech stocks have improved significantly for September.

Investors remain optimistic about the stock market outlook heading into year end because of the positive impact of low interest rates. The Fed's cutting interest rates will result in a significant drop in borrowing costs, which bodes well for capital-intensive businesses looking to access cheap capital.

The central bank aims to achieve a soft landing for the economy. In this situation, inflation must return to the 2% goal without the U.S. economy sliding into a downturn. If the central bank reduces interest rates prematurely, it faces the danger of a severe surge in inflation. Conversely, if it reduces rates too late, it might cause a severe recession.

While interest rate cuts are expected to offer a much-needed boost, disappointing earnings, and lackluster guidance could curtail market gains, especially for the best 52-week high stocks to buy, according to short sellers.

Several companies are under immense pressure after their valuation skyrocketed amid the artificial intelligence frenzy. Consequently, any concerns about slow earnings and revenue growth should send jitters, triggering significant pullbacks.

Adam Turnquist, the head of technical strategy at LPL Financial, mentioned that the S&P 500 typically experiences about three annual declines of at least 5%. On average, it has seen around one 10% decline each year.

Looking forward to the rest of the year, experts predict that the best 52-week high stocks to buy, according to short sellers, could keep rising, but they caution about the dangers of premium valuations.

At the same time, financial experts believe that although economic expansion will slow down in the next few months, they don't see a situation that could cause a recession.

Our Methodology

To compile the list of the best 52-week high stocks to buy now, according to short sellers, we first screened for stocks that were trading near their 52-week highs (0-10% range) using the Finviz stock screener. Next, we looked at their short interest and picked the stocks with the lowest short interest that were the most popular among elite hedge funds. The stocks are ranked in descending order based on their short interest.

At Insider Monkey, we are obsessed with 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)

52 Week Range: $143.13 - $165.78

Current Share Price: $164.23

Short interest rate: 0.82%

Number of Hedge Fund Holders: 80

Johnson & Johnson (NYSE:JNJ) is a healthcare company that researches, develops, manufactures, and sells various products worldwide. Its Innovative Medicine segment offers products for various therapeutic areas, such as immunology, including rheumatoid arthritis, psoriatic arthritis, and inflammatory bowel disease.

Johnson & Johnson (NYSE:JNJ) is one of the best 52-week high stocks to buy, according to short sellers, owing to its extensive and diversified portfolio of drugs and medical equipment. It also boasts a global presence and an extensive history in maneuvering the medical sector, providing considerable benefits.

Johnson & Johnson (NYSE:JNJ) boasts over 10 top-selling drugs within its drug division. The company can manage interruptions in one of its divisions without facing major financial setbacks. In the second quarter, sales of pharmaceuticals and medical devices rose 4% to $22.45 billion, beating estimates of $22.38 and affirming underlying growth.

Adjusted net income, on the other hand, totaled $6.84 billion or $2.82 a share, beating consensus estimates of $6.59 billion or $2.71 a share. The better-than-expected second-quarter results were driven by strong sales of drugs, including cancer treatment Darzalex and blockbuster psoriasis drug Stelara.

Owing to strong demand for the company's drugs and equipment, Johnson & Johnson (NYSE:JNJ) has raised its full-year guidance and now expects sales to range between $89.2 billion and $89.6 billion, compared to $88.7 billion and $89.1 billion.

Johnson & Johnson (NYSE:JNJ) is a standout dividend stock. The company has consistently raised its dividends for an impressive 62 years, and its projected yield is currently over 3%. Johnson & Johnson is an excellent choice for a blue-chip dividend stock to purchase this month.

As of the end of June 2024, 80 hedge funds tracked by Insider Monkey were bullish on Johnson & Johnson (NYSE:JNJ), holding stakes totaling nearly $4.7 billion.

Overall JNJ ranks 6th on our list of the best 52-week high stocks to buy according to short sellers. 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 a promising AI stock 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.