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If you think that the U.S. dollar is doomed, this is the stock for you

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February 05, 2009 – Comments (8)

I see a lot of talk around CAPS about how the U.S. dollar is likely headed for a major fall.  I am somewhat bearish on the future of the dollar as well...but I think that this drop will likely take much longer to materialize than many others here do.  My reason for this is as the old saying goes, "In the land of the blind, the one-eyed man is king." 

Yes, the U.S. economy is messed up right now and the deficit is skyrocketing, but the ROW (rest of the world) is messed up as well.  Many believe that the Euro won't survive, the UK is probably in even worse shape than we are, Japan has been stuck in the mud for more than a decade...you get the idea.

Anyhow, if you want a stock for the long haul that will pay you nearly 6% to wait for the eventual drop in the U.S. dollar Philip Morris International is for you (PM).

PM's stock has experienced some weakness on the heels of its latest earnings announcement.  It beat analysts' estimates for the quarter, but its forecast for 2009 earnings missed them...almost solely as a result of expected dollar strength.  Specifically, Philip Morris forecast that its 2009 EPS would range from $2.85 to $3.00 versus the consensus estimate of $3.32 from analysts.  An astounding $0.80 of this miss is a direct result of the hit that the company expects to take from a stronger U.S. dollar. 

Operationally, PM's sales volume was a little weak in certain areas but for the most part the company is in great shape and its miss is completely currency related.  If the dollar falls off of a cliff like many here believe it will, PM will soar.  Imagine what its results would look like with an $0.80 gain from currency instead of a massive loss.

Deej

Long PM

8 Comments – Post Your Own

#1) On February 05, 2009 at 7:02 AM, PSUchris (< 20) wrote:

Hey, dumb, and irrelevant question, but you're the most recent to post so I'm hoping you were still on..

 

I have just started to invest and am on Sharebuilder (with only a couple hundred in shares).. just wondering if I can pre-market trade on there...? And if so, if it can just be done by placing a regular Limit order..

 

Thanks,

Chris

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#2) On February 05, 2009 at 7:17 AM, kaskoosek (55.71) wrote:

Good spot deej.

I would bet my life on this pick.

Anyway even if a country's currrency goes down, inflation will likely follow.

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#3) On February 05, 2009 at 7:25 AM, PrestonCheek (31.99) wrote:

Are you talking about trading before or after hours? If so you can but before you do google it or hit your help button on your brokerage page and type in extended hours trading for the rules. I hope this helped you.

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#4) On February 05, 2009 at 7:28 AM, XMFSinchiruna (27.35) wrote:

Hey Deej,

Just playing devil's advocate here... I know PM is a solid company with a rock-solid dividend, but with Obama looking to fund the new children's health care initiative through tobacco taxes, and present tobacco tax revenues nowhere near the sum this program needs, doesn't that foretell of a significant increase in the tobacco tax on the way and thus even further price increases on a pack of cigarettes in U.S.? I have gasped many times at how much Europeans and other regions of the world smoke, so of course foreign sales are an enormous portion of their business, but it can't help to have the domestic sales basis eroded by significant price increases at a time when Americans can ill-afford to shell out more dough. 

In a normal economy, I would say most smokers would just shell out the extra cash, but this is no normal economy.

I don't have strong convictions on PM either way, though I appreciate the thesis of it being a highly resilient business during a downturn. I'm merely thinking out loud about the potential impacts from the Obama health care plan. Thoughts?

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#5) On February 05, 2009 at 7:39 AM, PSUchris (< 20) wrote:

Talking about before hours, and I have done both, with no luck.

 

Thanks,

Chris

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#6) On February 05, 2009 at 7:56 AM, PrestonCheek (31.99) wrote:

To place an extended-hours order, select either Ext. AM or Ext. PM, Day + Ext., or GTC + Ext. as the expiration from the stock order entry screen.

A.M. extended-hours orders (Ext. AM) can be placed at any time. The Ext. AM trading session is from 8:00 a.m. to 9:15 a.m. ET, Monday through Friday, excluding market holidays.

P.M. extended-hours orders (Ext. PM) can be placed at any time. However, the Ext. PM trading session hours are from 4:15 p.m. to 8 p.m. ET, Monday through Friday, excluding market holidays.

Day + Ext. (Day + Extended Hours) - Orders placed after 12:00:00 a.m. and before 7:59:59 p.m. ET and marked as Day + Ext. are valid between 8:00:00 a.m. and 8:00:00 p.m. ET that day. A Day + Ext. order placed between 8:00:00 p.m. and 11:59:59 p.m. ET is valid between 8:00:00 a.m. and 8:00:00 p.m. ET the next market day.

GTC + Ext. (GTC + Extended Hours) - A GTC + Ext. order works the same way as a GTC order, except it also includes extended hours trading sessions each day.

Eligible Order Types
You may place only unconditional limit orders to buy , sell, or sell-short during extended-hours trading. Options, mutual funds, and bonds cannot be traded during extended-hours trading sessions. Stop orders, or orders having all or none (AON), do not reduce (DNR), or fill or kill (FOK) special instructions are not accepted for extended-hours trading.

Eligible Securities
Over 8,000 Nasdaq NMS stock and NYSE and AMEX listed stock can be traded during extended-hours sessions. Please note: There may not be a market for all eligible stock.

Quotes
You can get extended-hours trading quotes from SnapTicket™ , Streamer and the Research section. Extended-hours stock quotes may differ significantly from regular session closing prices, and may not include quotation information from all market participants.

This may not be exactly what your brokerage says but if you look at your trade ticket click Ext AM or PM to execute your trade, just be careful.

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#7) On February 05, 2009 at 9:51 AM, Terok1313 (30.74) wrote:

Sinch - PM is purely the international arm of Phillip Morris.  The domestic arm is covered separately by Altria (MO).

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#8) On February 05, 2009 at 10:37 AM, TMFDeej (99.43) wrote:

Hey Sinch.  As Terok just pointed out, PM has no exposure to the U.S. market.  It was spun off from Altria around a year ago.  Big MO has the rights to distribute Malboro, etc...in the United States.

Deej

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