Selling Altria (MO), Putting the Money in Philip Morris International (PM)
In keeping with my recent analysis of PM and my recent analysis of MO, I am selling my MO stock and putting it in PM. One of the bad habits I am trying to combat is inertia. I think that I use my aversion to paying capital gains taxes and commissions, and my long-term view, as a crutch, and excuse, not to sell even when I think I should sell. MO has been a strong CAPS outperformer for me over the past two years (and I have owned it for longer than that). But at these relative valuations, and given the long-term growth-prospects of each, I just see no compelling reason to own MO in addition to owning PM.
I should note that I think MO will continue to outperform the market at least in the short term. I also think it will report nice earnings (as PM did), and that because of its one-time charges in 2011, it's 2012 earnings will bring its payout ratio down from the apparent 90s into the 70s -- very manageable. But it is very fully priced relative to PM, and I think trades in tandem with SAB Miller, which is also fairly-fully-priced. This CAPS account will likely suffer a bit but in real life I think I'll do better with the money in PM than in MO, from here on. With PM, as discussed in the analysis, what I'm really going to want to track is not operations, which are great, but world attitudes towards smoking, and whether countries respect the rule of law or decide to turn against "the big bad American company," which will be an additional bigoted drag in many non-American countries, which is likely to go along with any major shift in smoking sentiment.
As stated many times, this CAPS account is all real-life picks, and only real life picks, and all of the stocks I own are reflected here. I presently own no stock that is not reflected here. Because my policy is to close the CAPS pick when I sell out entirely, I will be closing my MO pick, noting the sale price in the comment. When I add the money to PM I will not the purchase price in the comments for that pick.
DTAF / TDUM / HUM TDUM T / D-MON