Bet on JNJ & Hold on to Apple to Grow Your Retirement Fund Stress-Free

In a well-balanced retirement portfolio, investors should aim for a mix of defensive and growth stocks. This approach offers both stability and the potential for wealth creation over time. By investing in Johnson & Johnson JNJ and holding on to Apple Inc. AAPL, you get the best of both worlds — the reliability and income of a proven healthcare leader and the innovation and growth of a global tech giant.

JNJ: Stability & Steady Growth in Any Market

Johnson & Johnson is a reliable investment because it is a leading provider of essential healthcare products that people need, regardless of economic conditions. Notably, despite losing exclusivity for its blockbuster drug STELARA, the company’s second-quarter 2025 operational sales increased 4.6%, proving its resilience. This shows that Johnson & Johnson is strong and can continue to grow even when facing challenges.

Interestingly, JNJ's uniquely diversified business comprises both important medicines — like cancer drugs CARVYKTI and DARZALEX — and life-saving medical devices, such as tools that help patients recover from heart problems. Because it doesn’t depend on just one product to succeed, its business is more stable and less risky.

Also, JNJ’s balance sheet is strong, as reflected in $19 billion in cash and marketable securities, and a debt-to-capitalization of 39.3%. Thus, the company can lean on its balance sheet strength to sail through an unfavorable business environment.

Overall, the stability of JNJ’s business model lies in its ability to generate substantial free cash flow ($6 billion in the second quarter of 2025), which it believes to strategically allocate toward mergers and acquisitions as well as returning capital to shareholders through dividends and share repurchases.

AAPL: Innovation Engine Powering Long-Term Growth

We all know that Apple is not just selling phones or laptops, but rather that the tech giant is creating a connected world that keeps people coming back.

In its fiscal 2025 third quarter, AAPL’s newest iPhones helped boost sales by 13%, while Mac sales rose 15%, and its Services business (like iCloud and Apple Music) reached a record high. More people than ever are upgrading their devices, drawn in by exciting new features like faster chips, smarter AI and sleek new designs. Importantly, the number of Apple devices in use worldwide hit a new record, showing that customers aren’t switching brands—they’re sticking with Apple and buying even more of its products.

What’s more, Apple has a strong growth opportunity because it's constantly finding new ways to make money and stay ahead of the curve. Big trends like artificial intelligence (through Apple Intelligence), new tech like the Vision Pro headset and expanding into fast-growing regions like India and the Middle East are boosting its future potential. This combination of brand loyalty, innovation and expanding markets makes Apple a compelling growth engine for the long term.

What Investors Should Do Now?

Given the current market backdrop, it's important to look at how both JNJ and AAPL are valued before making any investment decisions.

JNJ, carrying a Zacks Rank #2 (Buy), is currently trading at a trailing 12-month P/E of 17.15x, below the industry average of 22.26x. This suggests the stock is undervalued, offering a potentially attractive entry point for investors. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In contrast, Apple, carrying a Zacks Rank #3 (Hold), trades at a trailing P/E of 30.31x, which is higher than the industry average of 28.38x. This indicates the stock is relatively expensive at current levels. Therefore, while new investors may want to wait for a better entry point, existing shareholders can continue to hold Apple for its long-term potential.

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This article originally published on Zacks Investment Research (zacks.com).

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