Altria Group Inc (MO)

[DiscoverGold]

Altria Group: A Smoking Buy, Part II
By: Seeking Alpha | December 15, 2019

Summary

• Altria has rebounded following a sharp sell-off over concerns about declining cigarette consumption and a regulatory crackdown on e-cigarettes.

• Revenues from cigarettes remain stable and are unlikely to decline substantially in the foreseeable future.

• We remain bullish on Altria shares and believe that shares offer both an attractive dividend yield and appreciation potential.

Introduction

We first wrote about Altria Group (MO) in late October, arguing that market fears about a regulatory crackdown on e-cigarettes and declining cigarette consumption were overblown. We made the case that the investment in Juul reflected the right approach by management (expanding aggressively into new product segments to make up for declines in regular cigarettes) and that criticisms of the deal have been clouded by hindsight bias.

Shares have risen by 7% since then due to improving sentiment and solid Q3 earnings which showed the type of stable top-line and bottom-line results that have made the company a favorite for income investors and retirees.

In this article, we will argue that Altria Group continues to present an attractive investment opportunity and that investors should not be overly concerned by the problems that Juul has faced in recent months.

Business Overview

Altria Group is a Virginia-based conglomerate that is involved in the production and sale of tobacco-based products. It is the parent company of Philip Morris USA (which sells Marlboro, Virginia Slims, and other cigarettes). MO also owns a 10.5% interest in Anheuser-Busch InBev (BUD) and a 35% stake in Juul Labs. The company has made a concerted effort in recent years to combat declining cigarette sales volume by diversifying into different product segments...

Read Full Story »»»

DiscoverGold