The intelligent investor, however, gets interested in big
growth stocks not when they are at their most popular—but when something
goes wrong. In July 2002, Johnson & Johnson announced that
Federal regulators were investigating accusations of false record keeping
at one of its drug factories, and the stock lost 16% in a single day.
That took J & J’s share price down from 24 times the previous 12 months’
earnings to just 20 times. At that lower level, Johnson & Johnson might
once again have become a growth stock with room to grow—making it an
example of what Graham calls “the relatively unpopular large company.”
This kind of temporary unpopularity can create lasting wealth by enabling
you to buy a great company at a good price.
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