Which Would You Rather – Procter & Gamble Or Johnson & Johnson?

When looking to make an investment often times investors look to get into what’s “in” or what’s “hot.” This is why gold has recently been on an amazing bull run (which is now effectively over,) and why housing was hot before it. Much of this can be seen as a result of speculators piling into the sector. An alternative potential strategy is to invest in brands with which you are familiar. In this latest edition of Which Would You Rather? we will take a look at two brands which are very close to home – household product manufacturers Procter & Gamble PG and Johnson & Johnson JNJ.

In comparing these two companies we will look at the last 12 months or so of market behavior. In this way we will avoid long company histories, and instead take more of a “what have you done for me lately” approach.

In contrast to the S&P return for 2013, Procter & Gamble had a decent past 12 months. The company started the year of 2013 at about $68.00 per share. In late 2013 the company spiked to $85.21, before settling to about $80.54 in more recent trading. While a jump from $68.00 to $85.0 would represent a nice 25% profit, this would still fall short of the S&P and Dow returns for 2013. Additionally, this stock seems to have been shedding value at the end of the year, precisely when the overall market was strengthening. With the Dow down early in 2014, and clear growth potential in 2014 elusive, it is difficult to see exactly where Procter and Gamble will land this year.

Johnson & Johnson started 2013 with a stock price of $71.50. This represented a bit of a breakout from a trading range of $60 to $65.00 that the stock saw from mid-2010 until mid-2012. The stock continued a more or less upward trend, touching 93.45 in July 2013, representing a 30% increase. The stock did pull back a bit but stayed strong for the rest of the year, closing at just under $93.00 in recent trading.

Both Procter & Gamble and Johnson & Johnson have divisions which focus on manufacturing household products. However, what sets them apart from one another are the companies’ additional business divisions and the ways in which the companies are run. Of note is that despite the Johnson & Johnson has had the better stock run over the past year, the company has also had a significant number of hig profile lawsuits recently. These lawsuits led to a $2.2 billion settlement the company reached in November with the U.S. government relating to the illegal marketing of drugs including Risperdal, Invega and Natrecor.