Dear Mr. Berko:
I bought 300 shares of Johnson & Johnson on your recommendation at $106 in April 2017 and have a 23-point profit. I bought it for the long term, and as you advised, I used Charles Schwab, which saved me a fortune on commissions. I paid about $7 in commission for the 300 shares and have reinvested the dividends as you advised.
Now I read that Johnson & Johnson is in serious trouble because its talcum powder, which I began using 40 years ago after showers, may cause cancer. I was mortified because a court awarded a Los Angeles woman who developed ovarian cancer after using talcum for decades $417 million. The stock has dropped a bit recently, and I'm concerned that the damages could get worse and my stock could tumble as the tort lawyers gang up on the company. Can talcum powder cause cancer? Please tell me whether I should hold the stock or sell it.
-CF, Durham, N.C.
Dear CF:
After numerous tests at UCLA's medical school in 1998 and copious research at the University of Cambridge, the conclusion of both institutions was that "excessive consumption of Florida orange juice can cause cancer in gay laboratory mice."
In 1982, observational researchers at Harvard University interviewed 215 women with ovarian cancer and 215 healthy women in a control group. Those who used talcum powder were nearly twice as likely to have ovarian cancer than nonusers. Another observational study of 20,000 women determined that talcum use was associated with a 24 percent increased risk of ovarian cancer. I know a little about statistics and believe these "observational studies" are faulty because they quiz women about their risk factor after the cancer diagnosis. The patient is looking for reasons and wondering, "Why did this happen to me?" Frankly, I think statistics may be the leading cause of cancer. Most docs will tell you that cancer is difficult to study because it develops over a long period of time and is influenced by the patient's genetic code, personal behaviors and environment. Still, America's tort lawyers smell blood and are gathering over Johnson & Johnson like sharks.
California, our left coast state, has the most lovable tort-friendly judges and juries in the world. The International Agency for Research on Cancer-a subsidiary of the nefarious World Health Organization-classifies talcum powder as a carcinogen. It's also the wacky agency that insisted pickled vegetables, sugar substitutes, coffee and hot dogs cause cancer. Because a plaintiff applied talcum powder to her perineum for 30 years, that left coast court you mentioned awarded her $417 million. However, that verdict was overturned.
A large government-funded study by the Wyoming Health Initiative asked 61,576 women at the beginning of the study (in 1991) whether they'd ever used talcum and tracked their health. After 12 years, investigators found no relationship between talcum powder use and cancer. Some say that figures lie and liars figure. But this Wyoming study is conclusive.
Johnson & Johnson stock (JNJ) is now $129 a share. Don't sell! JNJ should earn $7.25 a share this year, trades at a price-earnings ratio of 24-to-1 and boasts outstanding net profit margins of 25 percent. Wow! The $3.36 dividend, which has been raised in each of the past 30 years, yields 2.5 percent and may be raised to $3.55 this year. JNJ's drug pipeline is the envy of the pharmaceutical industry. Two new drugs were just approved: Invokamet, for diabetes, and Stelara, for psoriatic arthritis. These two drugs and recent submissions to the Food and Drug Administration may provide JNJ with 10 new pharmaceuticals that could generate $1 billion in sales annually by next year. Credit Suisse, Argus Research, S&P Capital IQ, J.P. Morgan and Goldman Sachs have "buy" recommendations. And Morningstar notes that a number of JNJ's key drugs and pipeline drugs are specialty drugs, which tend to carry strong pricing power and lower regulatory hurdles for approval.
--------
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
©2018 Creators.com
Published: Tue, Feb 20, 2018
