Regardless of the future direction of the S&P 500 average, Altria (MO): the United States's largest producer and distributor of tobacco products, should maintain its historical performance of duly rewarding shareholders.
The Fundamentals:
Price: $15.15
P/E: 4.92
Dividend & Yield: 1.28 (8.40%)
5 Year
A look at the basic 5 year chart illustrates the stability and commitment to long term growth of the company. Note the April 2007 spinoff of Kraft Foods & PMI International.
The attraction to own Altria lies in its 8.4% dividend yield, with near term U.S Treasuries yielding just over zero and 10 year notes barely above the 2% level, a dividend of this magnitude is very attractive compared to the overall broader market. Savers, like myself are being punished by the action's of the Federal Reserve who have pushed the Fed Funds overnight lending rates to historical lows. A current money market yield of just over 2.25% is not sustainable to keep up with long term inflation.
This link illustrates Altria's commitment to shareholder value, the company has increased its dividend each of the last 10 years.
dividend.com
Altria, unlike the broader market is not as dependent on the cyclical nature of the business cycle, their product: tobacco, which with its recent acquistion of UST includes smokeless products is not something readily shed in undue economic circumstances.
I also see room for capital gains from this $15 dollar level as the broader indexes continue their decline & muddle through period. Altria has traded lower in the past several months alongside market indexes and the shares have also been under pressure from potential lawsuits involving the brand of "light" cigarretes. However, Altria has faced litigation pressures in the past and are currently well poised to handle their legal issues and appear stronger because of it.
Recent Readings on (MO):
Best Stocks for 2009
Note the recent legislation of the FDA which in essences provides additional barrier to entry into the tobacco marketplace. Altria currently operates 50% of the U.S tobacco industry.
Altria has been great time to exit
I couldn't disagree with more with Todd's assesment of Altria, however there are a few very relevant comments (below the article)that shape the arguement against Todd's view which I find very insightful notably eric k, michael, fly, and Dividends inc
dividendinc.blogspot
A terrific blog I came across while researching MO, and a welcome addition to my influential minds category.
Altria closes buy of UST
The addition of Copenhagen and Skoal products gives Altria ample market share in the smokeless tobacco category.
Not to be overlooked is Philip Morris Capital Corporation (PMCC) Altria's investment company that manages leveraged and direct finance lease portfolios. With an ever increasing stake in South Africa's SAB Miller now at 29% Altria continues to diversify its product line while recieving healthy quarterly dividend payments.
Recommendation: BUY
Price Target $14.50-$15.50
Thursday, January 8, 2009
Wednesday, December 17, 2008
Some SKF
Bought some SKF this morning day after the .75 basis point cut by the Fed, the euphoria should subside and reality set in...looked at QID but it had legs early..
Thursday, November 13, 2008
Thursday, October 23, 2008
Friday, October 10, 2008
VIX @ $76!
Wall Street's "gauge of investor fear" reached an all time high of $76 today as the market once again lost over 600 points at one time in this trading day...With market conditions severely oversold its time for a near term rally and I will try tp position myself accordingly...
VIX!
VIX!
Thursday, September 25, 2008
Richard Duncan's "The Dollar Crisis". 2003
Is the most accurate and sober analysis of what has and will come to fruition in the economy and subsequent capital markets. This book published in 2003 has provided detailed analysis into how the housing and credit markets will unravel(and did) and how the NPR II (New Paradigm Recession; End of the American Consumer) will make the 2001-2 recession feel like a walk in the park...He predicts (accurately) that the government will step in and bail out financial institutions and firms which will only prolong the inevitable...A few exerpts from Chapter 9, Global Recession: Why, When, and How Hard? follow...the only thing Mr. Duncan miscalculated was the year (2004-5) which makes our problems all the more troubling
"The outlook for the global economy is profoundly disturbing. During the 1990's, the booming U.S economy served as the world's engine of economic growth. Surging credit expansion in the United States allowed businesses to increase their investments and consumers to boost their consumption, producing the longest uninterrupted economic advance on record."
"The U.S's trading partners expanded their industrial capacity to meet U.S demand, and rising investment allowed increasing consumption as well. U.S demand for imported goods meant more jobs. more corporate profits, and more economic growth throughout the rest of the world" Think New Paradigm
"All that is coming to an end. The over-indebted American economy has entered a recession that is likely to be as extreme and prolonged as the economic boom that proceeded it. The downturn began in 2001 with a sharp fall in U.S private investment. The repercussions of that reduction in investment-primarily technology related investment-were felt around the world. Despite the fall off in investment and rising unemployment, consumption in the United States remained robust in 2001 and 2002, providing a crutch for the wounded economy. A rapid reduction in interest rates to 40 year lows enabled the American consumers to continue increasing their indebtedness and their consumption. Future developments, however, will show that this aggressive monetary easing was nothing more than a palliative that merely prolonged and exacerbated the disequilibrium in the economy. The second, and more profound, phase of this recession will result in a steep decline in personal consumption. The American consumer is over indebted and will soon be forced to curtail the profligate behavior he embraced during the 1980s and 1990s. The downturn in consumption will cause a further reduction in investment. Falling U.S imports will throw the world into recession.
Mr. Duncan also goes into detail about the unsustainable Current Account deficits, they cannot continue to expand because they are deflationary in nature and undermine corporate profitability around the world by facilitating over investment and excess capacity. (think new cars in lots, new homes barren, a glut of consumer and business products)
I can go on and on with exerpts from just this one chapter but if you are interested in more of his analysis I suggest picking up this book...be prepared for the worst however...
"The outlook for the global economy is profoundly disturbing. During the 1990's, the booming U.S economy served as the world's engine of economic growth. Surging credit expansion in the United States allowed businesses to increase their investments and consumers to boost their consumption, producing the longest uninterrupted economic advance on record."
"The U.S's trading partners expanded their industrial capacity to meet U.S demand, and rising investment allowed increasing consumption as well. U.S demand for imported goods meant more jobs. more corporate profits, and more economic growth throughout the rest of the world" Think New Paradigm
"All that is coming to an end. The over-indebted American economy has entered a recession that is likely to be as extreme and prolonged as the economic boom that proceeded it. The downturn began in 2001 with a sharp fall in U.S private investment. The repercussions of that reduction in investment-primarily technology related investment-were felt around the world. Despite the fall off in investment and rising unemployment, consumption in the United States remained robust in 2001 and 2002, providing a crutch for the wounded economy. A rapid reduction in interest rates to 40 year lows enabled the American consumers to continue increasing their indebtedness and their consumption. Future developments, however, will show that this aggressive monetary easing was nothing more than a palliative that merely prolonged and exacerbated the disequilibrium in the economy. The second, and more profound, phase of this recession will result in a steep decline in personal consumption. The American consumer is over indebted and will soon be forced to curtail the profligate behavior he embraced during the 1980s and 1990s. The downturn in consumption will cause a further reduction in investment. Falling U.S imports will throw the world into recession.
Mr. Duncan also goes into detail about the unsustainable Current Account deficits, they cannot continue to expand because they are deflationary in nature and undermine corporate profitability around the world by facilitating over investment and excess capacity. (think new cars in lots, new homes barren, a glut of consumer and business products)
I can go on and on with exerpts from just this one chapter but if you are interested in more of his analysis I suggest picking up this book...be prepared for the worst however...
Monday, September 15, 2008
SKF, Time to take the gain
With the SKF up $17.00 on the day ~ 15% its time for me to realize a gain, i dont have the time to sit around and be greedy and the thought of getting priced off of a stop sell limit on a bounce tommorow is just to irritating...although I feel there is money on the table, I need money in my pocket $$$ ....time for work...cheers
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