The mid-2012 major price correction from the low $80s down to the low $60s presented those who had missed MJN's breathtaking ascent to buy in with sweetened upside potential. As of yesterday, MJN's share price had ranged from a 52-week low of $61.27 to the May 28 high of $86.87. Since then, the stock has dropped more than 8% and closed yesterday at $79.92. Shares of MJN had been trading at a current price-to-earnings ratio of as high as 28 and a forward P/E of over 22. Its five-year expected price-to-earnings-to-growth ratio had soared to an ebullient level of over 2.3.
Yet, as one shareholder said, "There's not a darn thing wrong with this company, and when the share price drops to below $79 I'm going to buy some more shares." This kind of brand loyalty and confidence in the company is not based on blind love or wishful thinking. Mead Johnson Nutrition has a portfolio of brands representing specialized products parents have trusted for more than a century. The MJN product line claims that it is designed to "...encourage healthy growth, support brain development and address common feeding issues" of children, not shareholders. Although if what it offers is good for infants, it may be good for us big kids, too.
Then I read a company press release from April 30 announcing that Peter K. Jakobsen, 51, had been named as president and CEO by the company's board, following the company's annual meeting the same day in Chicago. Golsby had previously announced his retirement. "Throughout his career at Mead Johnson, Kasper has displayed a keen understanding of our operations, our customers, our markets, and the issues that drive this industry," said Jim Cornelius, the company's chairman.