Philip Morris Still Smoking

Like its fellow cigarette makers, defensive play Philip Morris (MO Quote) has been smoking in a burned-out market.

Now, even amid doubts about the strength of an economic recovery, analysts say the stock can still blaze. "We continue to believe that Philip Morris could have short-term appeal, as long as the market remains defensive," said Marc Cohen, a research analyst at Goldman Sachs. "But significant price-to-earnings multiple expansion could be limited for fundamental and legal reasons."

This year, tobacco stocks have been one of a few groups to outperform the broader market. The American Stock Exchange Tobacco Index is up 11%, while the S&P 500 Index is down 8%. On news that Philip Morris is selling its Miller Brewing beer unit to South African Breweries, the stock was up 67 cents, or 1.2%, at $56.68, just below a 52-week high. ...