360 Degrees of Altria

Of Two Minds About Altria, by James Cramer

Originally published on 6/6/2006 at 10:33 a.m.

Altria's not buying back stock. It had a not-so-hot quarter. It said that its restructuring is on hold. And yet it goes up pretty much every day.

That's just the Fed speaking. The market is saying you can't own anything that is levered to the economy because we are going to have one of the nastiest recessions you have ever seen.

That's a bet that I continue not to want to make. It is also the only game in town.

A poor-performing company is going up because people still smoke in a recession. You have to respect the fact that this is something that only happens when GDP growth crashes.

That's the hard-landing, "Bernanke doesn't have a clue" thesis. I have never gone wrong underestimating the Fed's wisdom. But this one is testing me. It is assuming oil is about to drop big because of a cessation of demand. It assumes that all commodity prices will be rolled back. It presumes that that we are done going out and done spending.

Way too many presumptions for me. Yet, this battle plan worked perfectly in 2000. Who can blame people for doing it again?

At the time of publication, Cramer had no positions in the stocks mentioned.

Outlook: Negative, by Richard Suttmeier

I have been and continue to be negative on Altria. It is rated a hold by ValuEngine and is trading 19% over its fair value of $59.51. The stock looks like it's forming a downtrend below the 200-day simple moving average of $72.76.

Altria has been holding up reasonably well above my semiannual and quarterly pivots of $67.34 and $70.46, however. If this zone fails to hold, the downside is to my annual value level of $60.63.