Jim Cramer featured the technical analysis of Suz Smith, portfolio manager with Strategic Portfolio Solutions and a Real Money contributor, during Mad Money's "Off the Charts" segment Tuesday. The pair examined the big four tobacco stocks.
Smith first looked at a daily chart of Vector Group (VGR) , which is involved in both tobacco and real estate with some e-cigarette exposure. She noted that the stock just broke out above its 50-day moving average and is forming a bullish flag formation, characterized by a sharp upwards move followed by sideways trading.
Smith offered up a price target of $25 a share and said this is a healthy stock to hold in a long-term dividend portfolio. Cramer was also bullish, calling Vector a solid buy with a 7% yield.
Smith then looked at the daily chart of Phillip Morris International (PM) , the world's leading cigarette maker with six of the top 15 global brands.
After a four-month consolidation, shares of Phillip Morris are also beginning what could be a flag formation, with both the relative strength indication and the MACD momentum indicate confirming the move. Smith felt any pullback to the stock's 20-day moving average would be a buying opportunity.
She added that stocks that get into the $90s generally draw towards the next big round number, which in this case is $100. Cramer said with so many foreigners continuing to take up smoking, Phillip Morris is also a buy with its 4.2% yield.
The bullish sentiment continued when Smith looked at Altria (MO) , what was once the domestic arm of the old Phillip Morris. Altria maintains most of the same solid brands as its international counterpart and is a chartist's dream, according to Smith. You want all your sin stocks in one name. This company, in business since 1919 and with a market cap of $123.4 billion, is for you, she said.
The stock have been in an uptrend since November, and buying near the bottom of that channel has always been a great entry point. The stochastics are signaling the stock is in overbought territory, but Smith noted that's been the case for six weeks, indicating strong demand. Cramer said with advertising for cigarettes limited in the U.S., Altria will likely stay number one for quite some time to come.
Finally, Smith looked at Reynolds American (RAI) , makers of Camel, Newport and Kool, among others. Smith said she doesn't like this chart and urged caution. She noted the RSI, MACD, and stochastics were all bearish and the stock is building the bearish head-and-shoulders formation. After running up from $46 to $52, she felt this stock, at best, is due for a rest.