Johnson & Johnson and United Healthcare face a series of hurdles

As the season of results continues, here are two big names to take note of that reported Tuesday.

Johnson & Johnson

Johnson & Johnson (JNJ) has certainly had an easier time appeasing the market. The proven pillar of many portfolios has experienced a slight stagnation and higher costs due largely to the legal costs of prosecuting its talcum powder. The company also spent about $ 400 million in regulations related to Xarelto, an anticoagulant. The problems created a quarter with lower profits, but the company also had stagnant revenues.

JNJ reported sales of $ 20.02 billion. Compared to 20.01 billion dollars in 2018, this is an increase of 0.1% from one year to the next. This is not really a robust growth. Of these sales, net profit declined 14.2% to $ 3.75 billion. On a diluted basis, this amount is $ 1.39 per share. Compared to $ 1.60 per share in 2018, this is a decrease of 13.1%. On an adjusted basis, JNJ reported a profit of $ 5.66 billion, which represents a 0.5% increase from one year to the next. This income represents adjusted earnings of $ 2.10 per diluted share, an increase of 1.9% from $ 2.06 last year.

Johnson & Johnson does not give its financial guidance under GAAP because of too much uncertainty. On an adjusted basis, diluted earnings per share are expected to increase from 4.3% to 5.5% to $ 8.53 to $ 8.63. This is relatively unchanged from the indications provided in January. Analysts' estimates seem to put earnings for the year in this range at $ 8.58 per share. If the company reaches these levels, the stock is currently trading at about 16.22 times the term profits. This is not a bad evaluation as long as legal battles do not escalate.

I am worried about the possible length of the lawsuits because of the problems associated with baby talcum powder. Overall, I think I consider JNJ a "wedge" at the moment.

UnitedHealth Group

UnitedHealth Group (UNH) was one of my best assets in 2019. Unfortunately, I was wrong. The company has actually exceeded earnings forecasts this morning, but the stock was down despite the news.

I said last week that I thought Medicare actions such as UnitedHealth would suffer this year from fears related to rising democratic demands for a form of universal health as part of the presidential campaigns of the United States. candidates.

If Bernie Sanders won the presidency, for example, I remained skeptical about the possibility of achieving such goals. The expansion of federal health care seems to be as difficult as when Republicans attempted to repeal the Affordable Care Act. Nevertheless, I certainly do not want to bet on the idea.

It is unclear how the name "United States Health" would be affected by "Medicare for all". This uncertainty creates fear. Fear is not good for actions.

UNH reported revenues of $ 60.3 billion in the first quarter. This is a growth rate of 9% from one year to the next. Net profit was $ 3.56 billion. This represents an increase of 22.2% from one year to the next. On a diluted basis, this income breaks down into a profit of $ 3.56 per share. This is an increase of 24%. This is what makes UNH's stock market performance so difficult to evaluate. The society is doing well. There are so many attributes to consider when considering it as an investment.

The company has a long-term debt of more than $ 34 billion, although the balance sheet is still strong, thanks in large part to more than $ 15.7 billion in cash / cash equivalents. Nevertheless, you must be wondering how all this would be affected if they were suddenly on the wrong side of a universal health care program.

UnitedHealth has raised its forecast for the full year thanks to the solid first quarter. The company now expects net earnings per share of $ 13.80 to $ 14.05. If this information is correct, the stock is trading conservatively at around 16.13 times expected earnings for the year. This is not a bad price in my book, but I think the growing fear of the uncertainty of health care will curb this thing. It's a justifiable fear. We can not predict for the moment what a fully controlled Democratic Congress and White House would do on our health system. Again, I think the chances of the votes being there are slim, but it could happen.

To that end, I almost think that UNH will spend the remainder of 2019 and most of 2020, its financial results being overshadowed by campaign polls. I would say that it's a very conservative "hold".

(UnitedHealth and Johnson & Johnson are stakes in Jim Cramer's member club Action Alerts PLUS.) Do you want to be alerted before Jim Cramer buys or sells these shares? Learn more now. )