Altria Group Inc (NYSE:MO) is the U.S. spinoff of the old Philip Morris. In 2008, after decades of pressure from regulators over the dangers of smoking, Philip Morris split its company into two.
One is Philip Morris International Inc. (NYSE:PM), which operates all the tobacco related businesses outside the U.S.
MO runs the tobacco business in the U.S. as well as having a major stake in brewer SABmiller Ltd (ADR) (OTCMKTS:SBMRY) and a major winery portfolio through Chateau Ste. Michelle.
The crazy thing is, MO’s tobacco revenue is basically zeroed out by analysts since there’s so much risk regarding the business. Yet in the past five years, the stock is up almost 150%.
Best Performing Stock
According to DividendChannel.com, MO and its predecessor Philip Morris, is the best performing stock of the past 50 years. That’s quite an accomplishment, especially from a company that sells one of the most unloved products in the marketplace.
What’s more, in the past 12 months MO has beaten the Dow and the S&P 500’s performance while managing a tobacco-heavy product line with a declining customer base. How is that possible? One word:
Altria’s e-vapor division Nu Mark now makes up 55% of the vaping market, and continues to expand.
MO is used to succeeding despite the odds. And now that smoking has lost its luster, it has found a new way to deliver nicotine without all the smoke and toxic chemicals associated with lit tobacco products. Bloomberg Businessweek’s recent cover story says it all:
“Designed by Marlboro in Virginia: The tobacco industry gets its Silicon Valley on.”
MO doesn’t just enter a market to compete — It enters a market to dominate and innovate.
Now, some may shy away from this quintessential “sin stock,” but if your morals aren’t at play, there are few stocks that have been so successful for so long. And that winning streak is likely to continue.
With the Anheuser Busch Inbev NV (ADR) (NYSE:BUD) merger with SBMRY, MO made a killing. It also rolled over some of its profits — due to its nearly 30% position – and now owns 10% of BUD.
MO + BUD = Amazing Year
The deal made its fiscal year 2016 earnings look stupendous — up 172% for the year and 723% for the quarter — but its this kind of deal that MO tends to find over and over again.
MO may not be a dividend aristocrat, but its 3.23% yield is one of the safest on the market. And it boosted the payout to 61 cents from 56.5 cents in mid-2016.
Since Jan. 1, MO is up 12% but don’t let that deter you. This stock has plenty of tailwind behind it in 2017, especially if the Trump Administration is as business friendly as it has been so far.
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.