For most investors, Johnson & Johnson (NYSE:JNJ) is perceived as one of the old guards of healthcare industry.

After all, it is the name behind Band-Aids and baby shampoo.

[ad#Google Adsense 336×280-IA]It’s also got a few pharmaceuticals on the market, like arthritis treatment Remicade, which generated $5.8 billion in sales last year.

Even so, in the shadow of news that Remicade’s patent has just been invalidated and a rival drug from Pfizer Inc. (NYSE:PFE) is already on the way, it’s just tough to see JNJ stock as a high-growth, hard-hitting pharma name.

It’s something for your grandmother, who owns it for the dividend.

A closer look at the company’s pipeline, however, may force investors to rethink what they think they know about this old school outfit.

This Is Not Your Father’s Johnson & Johnson

Calling a spade a spade, there was a time not that long ago Johnson & Johnson was less than impressive. Quality control had become a problem, leading to a string of recalls a few years back. Its device business was put up for sale in 2014, with the parent company unable to do anything fruitful with it.

And JNJ has been falling off the same patent cliff its rivals have been falling off of, with blockbuster drugs Zytiga, Procrit and Velcade — just to name a few — about to see their patents expire if they haven’t expired already.

It’s a misnomer to think JNJ shares are essentially un-ownable because Johnson & Johnson doesn’t have anything up its sleeve, though. It’s got a lot more in the pipeline than most investors appreciate.

One of those developments is AL-335, for the treatment of hepatitis C. Currently in Phase 2 trials, the drug has shown efficacy similar to the uber-expensive HCV treatment Sovaldi, from Gilead Sciences, Inc. (NASDAQ:GILD). Johnson & Johnson subsidiary Janssen says it will begin phase 3 testing of AL-335 in early 2017, with a projected launch in 2020.

The hepatitis C is worth nearly $12 billion per year, globally, and while Sovaldi and its sister drug Harvoni work, they’re both debilitating expensive. A more moderate-priced solution could make a big splash.

Meanwhile, esketamine, for treatment-resistant depression, recently began Phase 3 testing, and sirukumab is already in Phase 3 trials as a therapy rheumatoid arthritis. Esketamine should be submitted to the FDA for approval next year. Ditto for sirukumab, which means Johnson & Johnson could offset the loss of Remicade sooner than later.

The proverbial shining star in the works for Johnson & Johnson is Darzalex, which is part of a combination therapy for relapsed/refractory multiple myeloma.

It’s already been approved for some myeloma indications, with some drugs, but the lion’s share of its potential has yet to be realized. Other approved uses for Darzalex could come as early as the middle of 2017, further opening the door to an underserved $8 billion market much sooner than JNJ owners were initially expecting from the drug. It’s got five Phase 3 trials of the drug currently underway.

Don’t forget about Imbruvica, however, which is co-owned with AbbVie Inc (NYSE:ABBV). Like Darzalex, it’s been approved for one chronic lymphocytic leukemia indication, but it’s the focal point of six other Phase 3 tests right now. Peak sales are projected at $7 billion, although the recently awarded breakthrough drug designation for non-CLL ailments could push that potential even higher.

All told, owners of JNJ stock have to appreciate the fact that Johnson & Johnson has the potential to put up to ten eventual blockbusters on the market by 2020. Never even mind the earlier-stage items in the works.

That’s the most future promise J&J has had in a while.

Bottom Line for JNJ Stock

As impressive (albeit overlooked) as Johnson & Johnson’s drug pipeline may be, just as overlooked is the uncharacteristic dividend JNJ pays. As of the latest look, with JNJ stock priced at $119.50, it’s yielding 2.7%. Johnson & Johnson has consistently upped that dividend for 50 consecutive years.

So, that’s growth and income, all at a forward price-earnings ratio of 16.8.

It may be an old name that doesn’t have the same sex appeal as smaller biotech that’s swinging for the fences with a game-changing drug, but Johnson & Johnson is still a name worth owning for most people. There’s more going for it than many investors realize.

— James Brumley

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Source: Investor Place

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.