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Plenty of Risks Remain In St. Jude's Stock

What's more, the operational performances, which once demonstrated enormous potential, continue to decelerate. In the recent quarter, not only did the company post another decline in overall revenue, led by a 6% decline company's pacemaker business, but one of St. Jude's largest segment, the cardiac rhythm management (CRM) business, dropped again by 2%. This comes after CRM declined by 7% in the April quarter.

If there was any good news, it was in the company's atrial fibrillation business, which grew better-than-expected at 12% year over year. But even in areas like this where St. Jude does well, it still wasn't enough to impress me -- not when Johnson & Johnson posted 16% growth.

I don't want to make this sound like I'm just beating up on St. Jude. Though I've detailed some concerns with the company's products and its overall business, it's also worth noting that the company has done pretty much everything in its power, including subjecting the leads through rigorous testing to ensure the safety of customers. In fact, the FDA recently approved two St. Jude products that are said to help diminish the adverse effects of the malfunctioning leads.

So, there is progress being made as St. Jude has cooperated with the FDA's requirements. Nevertheless, to the extent that it justifies willfully dismissing the obvious risks that remain with this company, it doesn't seem prudent. At a P/E of 25, I rather take my chances with Johnson & Johnson -- as expensive as it might also be.

At the time of publication, the author held no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a co-founder of StockSaints.com where he serves as CEO and editor-in-chief. After 20 years in the IT industry, including 5 years as a high school computer teacher, Saintvilus decided his second act would be as a stock analyst - bringing logic from an investor's point of view. His goal is to remove the complicated aspect of investing and present it to readers in a way that makes sense.

His background in engineering has provided him with strong analytical skills. That, along with 15 years of trading and investing, has given him the tools needed to assess equities and appraise value. Richard is a Warren Buffett disciple who bases investment decisions on the quality of a company's management, growth aspects, return on equity, and price-to-earnings ratio.

His work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets.

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