Legendary fund manager Peter Lynch once said that you shouldn't invest in any idea you couldn't illustrate with a crayon.
Though I'm not much for crayons, I do love the pithiness of that line. We regularly preach the same idea at the Fool: Don't buy what you don't understand. And if you can't simply sketch out a company's business model -- how it actually makes money -- then maybe you shouldn't be investing in it.
It's a pretty safe bet that when you run through your morning routine, you probably use a Johnson & Johnson (NYS: JNJ) product. But the company does so much more than keep us squeaky clean and ouchie-free. In fact, it might surprise you to learn exactly how Johnson & Johnson makes the majority of its money. Let's take a look. (Note: I'm focusing on revenues here, not earnings.)
Sources: Johnson & Johnson 2011 10-K and www.jnj.com.
Think I missed something in this illustration? General thoughts on this exercise? Let me know in the comments section below. And if you haven't already, be sure to follow our Johnson & Johnson news and commentary using the Fool's free new My Watchlist tool.
At the time thisarticle was published Fool.com graphics/photo/art editor Dari FitzGerald doesn't own shares of Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson.Motley Fool newsletter serviceshave recommended buying shares of Johnson & Johnson and creating a diagonal call position in Johnson & Johnson. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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