Altria Group, Inc. (MO)

Altria just stumbled due to a lawsuit (claiming that the cigarette companies have been pulling the wool over consumers, making them believe that light cigarettes are safer than regular cigarettes) being granted class-action status. Some investors seemed to get scared by the announcement, especially since the tobacco industry could potentially have to pay out around $200 billion if they lose the lawsuit. However, I believe that this lawsuit is barely worth raising an eyebrow at. Sure, if you were to closely scrutinize Altria, there are plenty of things that you might find alarming – but only if you don’t look at the big picture. When looking at their legal fees, which are in excess of $1 million per day, it may seem that Altria is hemorrhaging money. Yet the stocks performance says otherwise – Altria is more than making up for the legal fees, and has been rewarding shareholders with roughly 20% annual returns for the last50 years. They pay quarterly dividends that consistently increase each year (currently a 4.4% annual yield), market cap is $164.86 billion, current P/E is 14.55, and EPS is $5.41. Couple that with more than a few analysts saying that Altria’s stock, which is in the $78 range, is currently undervalued (the analysts are valuing it north of $100) and you have a company with an excellent chance to outperform the market. Now, current shareholders might have to wait for this class-action lawsuit to play out before the stock price jumps up to its fair value, but I think that it will recover sooner rather than later. Altria has a history of winning legal battles (and more importantly, dodging any obligation to shell out penalty money), and there has already been a similar case regarding false advertising on light cigarettes that ended last December with the Illinois Supreme Court throwing out a $10 billion fine against Altria. Altria has proved itself a difficult target to pin down, and they sell an addictive product that keeps customers coming back for more (smiling or not). While I do not advocate smoking (no lung darts for me!), who am I to complain if other peoples choices will help me retire comfortably? Altria may not crush the market in the short term (because of the litigation), but is strongly set up to make shareholders happy in the long term. I give Altria a thumb up for the next 5+ years.

Unlocking value of Kraft and both tobacco franchises with spin-off of Kraft. Pays a great dividend.

Unlocking huge cash 20 billion in buybacks and increasing dividend give you the best but hurry the split occurs end onf March 08
The combined return will approach 25%

MO to 100

Can't kick it!

Consumer,Consumer,Consumer,Consumer,Consumer,Consumer, thats what we are and thats what they sell. Look in your fridge and look in the cupboard.

well the price of gas finally caught up too the price of cigarettes, the popular products that have become necessaties to make the world go arround. This company has always been a very solid company...

This stock has been beaten down by the litigation and is undervalued. Look for an upswing when they spin off Kraft and the international tobaco companies since both of these have been depressed by the US litigation.

I don't think cigarettes or their suits can hurt this one anymore. It's already factored in to the stock, and likely by the company too. Plus their various other divisions that produce various consumables...this seems like a solid choice.

The spinoff of Kraft will benefit both Altria and Kraft.

What's not too love. Everyone knows what's so good but Kraft will be a nice surprise in a year or so. It will get itself in order and turn things around now it is not a hedge against litigation

The MOD will continue to profit and as long as people in China smoke PMI will be just fine.

I think we can survive if the entire nation of Nepal decides to ban smoking. How much could they possibly pay per pack there?

More value to come after spinning off Kraft, don't believe everything is built into the price yet...solid and steady earnings, dividend, cash flow from international business.

Seems like we'll always find money to smoke no matter how poor we think we are

I will be interesting to see what happens if the company splits up. I'm looking for a positive stock price move until then.

Great yield for this stock (4%), plus once the Kraft division is spun off, it in itself is a private acquisition target which could boost returns if those shares are retained. I know cigarettes are a big taboo now, but you can't argue with this blue chips prospects for growth outside US.

Lawsuit news droped the price and is a bargain at 14 P/E/

This is a steady company with a long track record of growth.

good dividend in volitol market