360 Degrees of Altria

Altria has 2.1 billion shares outstanding, well in excess of the S&P 500 average of 636 million.

Its trailing 12-month sales of $98.6 billion are well above the strategy's minimum of 1.5 times greater than the S&P 500 mean of $17.6 billion.

Finally, Altria's tidy dividend yield of 4.3% puts it among the 50 companies with the highest dividend yields that passed the strategy's other screens.

The Dreman Strategy

My strategy based on the investment style of Mr. Contrarian, David Dreman, also singles out Altria.

Like the O'Shaughnessy strategy, it favors larger companies and screens for those with rising earnings over the last few quarters. Altria's EPS rose 20.28% in the first quarter from the previous quarter, five times the rate of the S&P 500. It expects positive earnings growth for the whole year, although analysts' projections are for a rather modest 3.7% rise. This could set the stage for an upside surprise.

To determine whether a stock is contrarian, it must be in the bottom 20% of the S&P 500 in two of the following four categories: P/E ratio, price-to-dividend ratio, price-to-cash-flow ratio and price-to-book ratio. It passes on P/E ratio and price-to-dividend (this last one really means that the yield should be in the top 20% of the market, which Altria's is).

It could be that a company is in the bottom 20% of these criteria because it is financially weak. However, Altria passes the strategy's tests for financial health: It has a payout ratio slightly below its past average (56.63%), a very impressive return on equity of 32%, a high yield and debt-to-equity considerably below its industry average.

This is a company that is performing and has a reasonably priced stock that could do even better in the future. You may not want to light up a cigarette to celebrate, but you may well want to buy its stock.

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Dead Money, by Alan Farley

Altria rallied to an all-time high of $72 last September. After that, the stock dropped into a sideways pattern and it has crossed through this level an astounding 53 times. In fact, it's trading right at the same price this week.

This means the stock is dead money and should be avoided except as a pure dividend play.