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Altria Is a Smokin' Cash Cow

I usually don't include a graph in my fundamental section but I have to point out the price stability and price growth persistence over the past three years with a graph of the weekly price trend.

Investor interests:
  • As stated, both the professional and individual investor seems to favor the dividend-paying cash cow
  • Jim Cramer has liked this stock for some time
  • Brokerage firms having the stock on their hold or better lists include Deutsche Securities, Stifle Nicolaus, Credit Suisse, JPMorgan, Citigroup, Barclays Capital and UBS

How does the market score MO against its peers? In the past year MO was up 38%, Philip Morris International (PM) up 30%, British American Tobacco (BTI) up 16% and Imperial Tobacco Group (ITYBY) up 15%.

Philip Morris International
  • TheStreet's rating of B
  • Dividend rate of 3.38
  • Revenue project to grow 1.9% this year and 5.5% next year
  • Earnings estimated to increase by 6.1% this year and 9.89% next year

British American Tobacco
  • Dividend rate of 3.79
  • Revenue projected to decrease by 0.4% this year but increase by 4.2% next year
  • Earnings estimated to grow by 6.7% this year and 10.7% next year

Imperial Tobacco Group
  • Revenue to be down 66.3% this year but back up 68.2% next year
  • Earning estimated to increase at an annual rate of 8.10% over the next five years

Conclusion: This is not a growth stock as I define it. A growth stock should have projections of increases in revenue, earnings and price of over 10% to be in that category.

For those of you holding this stock for income there seems to be no reason to sell it at this time. It is ideal for income investors or in an IRA set up under a dividend reinvestment program.

At the present time the market is valuing income at a premium. Please watch the share price to see when that changes. In the long run it is the total return that counts and that is what you should monitor. Watch the moving averages and turtle channels for price weakness.

At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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