UST, Inc. (UST)

JMCB3 (36.80) Submitted: 3/03/08 10:53 PM : Start Price: $52.63 UST Score: -7.30

Looks like this board needs a bear case. Nothing personal or political, just a little history lesson. Take it from someone who missed out on a pile of cash from 2000 to now. I do not own nor am I short any tobacco stocks now, nor do I intend to at least until this election is over.





MO and smokeless tobacco is the least of UST's worries right now.


I am still kicking myself for not buying MO, UST or any tobacco stock when Bush was elected in 2000 -- MO has roughly quadrupled from March 2000 to now -- and you know there aren't four times as many smokers now as in 2000!!





Take a look at tobacco companies the months before and after "W" was elected in 2000. RAI March 2000 Low $15.75, March 2001 High $60.42. MO March 2000 Low $19.00, March 2001 High $52.04. UST Low March 2000, $13.94, High March 2001 $32.70. All of these at least doubled in a year when the power in the White House shifted from Democrat to Republican.





Coincidence? Let's take it the other way -- when Bush Sr. lost in Nov 92 -- UST was a low in Nov 92, $22.45. After Clinton taking over, UST's low in April of 93 was $18.26. That's an 18.6% drop in six months!! Switches in political power can be powerful forces in the stock market!!





Tobacco stocks were severely depressed under Bill Clinton -- this is not political posturing -- these are facts. If you don't believe me, go back and look at the historical prices for yourself on just about any tobacco stock around March 2000 versus March 2001 (or any time the parties and therefore power switches in the White House). No reason to believe history won't re-repeat (or I guess that's reverse) itself if there is a switch in parties in the White House in 2008.





Markets typically discount/price for 6 to 12 months in the future and this is starting to get the Street's attention. If you're instituional money sitting on $100 million or more in tobacco stocks right now, you are sweating, big time!! And probably selling off a little (driving prices down).





In all fairness there are stocks that will do better if the Dems are in starting in 2009 -- however, UST is not one of them. Not like we're in a great market right now either.





In the words of Donald Trump, "This is nothing personal, just business." I realize that if McCain does win in November that this thesis goes right in the toilet, but you can't say you've not been warned.





Class dismissed!!

Report this Post Replies: 0 | Reply