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