Altria Group Inc: MO Is Still a Smoking-Hot Stock

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Big MO, or as it’s called now, Altria Group Inc (MO) is certainly a controversial company.

Altria Group Inc: MO Is Still a Smoking-Hot StockAs one of the leading ‘sin’ stocks — it is the leading cigarette and smokeless tobacco maker in the world — many people shun it. That is to their misfortune.

MO has delivered dividend growth to its shareholders every quarter for the past 47 years. However, given its different incarnations over the past decade or two, MO doesn’t make the list of dividend aristocrats.

And that’s fine by me. That means all those ETFs that have bundled the dividend aristocrats into their funds have left Altria stock alone. All those socially responsible investors that won’t touch it — no problem.

Altria Is Still a Winner

Barron’s 500, a list of the top companies in world over the past 3 years, just listed MO as the No.3 company on its list, with straight A scores across the board. If you buy stocks to make money and not to make a political statement, you have to look at this one.

Do it for your grandchildren.

And the amazing thing is … the U.S. government as well as many state governments have been actively engaged in trying to kill Big MO for decades. Its current form, with Altria its U.S. business, and Philip Morris International Inc. (PM) its non-U.S. business, was meant to kill MO as smoking in the U.S. dropped.

Right now, Altria is essentially comprised of the domestic U.S. tobacco business as well as a very impressive collection of wine estates, under its Ste. Michelle Wine Estates subsidiary. It is also capitalizing on the new e-cigarette trend, or as MO likes to call them, innovative tobacco products.

After all the lawsuits and all the restructuring, Altria stock continues to grow its business and its dividend. Its flagship cigarette brand Marlboro actually saw a 1% increase in sales in the past year. Overall cigarette sales were up 1.2%.

Over the last 5 years, MO stock is up 133%, or about 26% a year. Not bad for a U.S.-focused tobacco company in the 21st Century. In the last 12 months, in this lousy economy, Altria has gained 24%. How many other companies with a $122 billion market cap are realizing that kind of growth? Not Apple Inc. (AAPL), not Microsoft Corporation (MSFT) and not Nike Inc (NKE).

The fact is: MO has built a recession-proof business. Its products have the benefit of being addictive, but you could argue the same for Starbucks (SBUX) and coffee, or The Coca-Cola Co (KO) and sugar. When times are good, they’re a splurge item, when they’re bad, they’re a coping mechanism.

Either way, it works for Altria. And its investors.

Its forward guidance for the year is looking for 7% to 9% growth. Add in its generous — and sturdy — dividend, and you’re looking at double digit growth with very little risk.

The simple point is this: If you can see past how MO makes its money, there is a gem of a stock there.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/05/altria-stock-mo-stock-smoking-hot/.

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