The $130-billion Altria Group (MO - Get Report) , famous for premium tobacco brands, Marlboro, Black & Mild, Copenhagen and Skoal, is a smart investment opportunity in these troubled times.

With above-average earnings prospects, bargain valuations, sharp operating margins and an over 3% dividend yield, Altria exemplifies solidity, profitability and long-term growth potential.

According to Morningstar, the brand controls over 40% of the U.S. cigarette market and Altria is expected keep surging forwards, unabated.

In fact, Altria should out-perform rivals like Reynolds American (RAI) over the next 12-to-24 months. Interested? Here's more about this stupendous growth machine.

It's no secret that Altria's tobacco businesses have a stranglehold across the most profitable tobacco categories in the U.S. Altria operates in segments such as cigarettes, smokeless tobacco products and cigars.

Like Marlboro, Altria's other brands Black & Mild, Copenhagen and Skoal boast of unbeatable brand equity along with demographics that push for higher pricing.

From 2011 to 2015, Altria clocked over 8% compound annual growth on earnings-per-share (EPS) growth while at the same time, consistently growing dividends.

Over this period, the company also propelled total shareholder returns of 204%, over double the S&P 500 returns.

Over the next five years, Altria is expected to offer 8.05% EPS growth annually, in-line with competitors like Imperial Brands and way ahead of British American Tobacco.

Business growth momentum at Altria is unquestionable, driving its stock near 2008 highs. As per latest reports, Altria has maintained its cigarette market share at 51.4%.

While rivals like Japan Tobacco are striving to make in-roads and grab market share in the U.S., Altria (with its wide brand moat) will easily thwart such attempts. Add to that, revenues for smokeless products for Altria was up 9% on the back of volume gains.

Encouraged by its stellar performance, Altria has now pushed full-year EPS guidance to $3.01-to-$3.07, ahead of the $3.05 consensus. If the tobacco arm isn't rippling with glorious money-muscle, Altria's also extra-equipped with its wine and beer assets.

Altria has a 27% stake in SABMiller (SBMRY) , placing the tobacco giant in an enviable position, ready to participate in the worldwide $36 billion beer profit pipeline.

Equity earnings from Altria's SABMiller stakes have grown from $600 million in 2010 to over $1 billion in 2015. And then, there's Ste. Michelle Wine Estates with a strong portfolio of premium brands. The impending SABMiller deal with Anheuser-Busch InBev (BUD) should again prove to be a boost for Altria. Our positive thesis on Altria is also partly on account of the buzz around consumer staples. Investors feel Altria (up 27% in 52 weeks) is an incredibly appealing investment amid prevalent global volatility and low interest rates.

Altria's $5-billion annual free cash flow and robust dividend credentials (seven years of dividend growth) offers solid comfort, in these uncertain times to conservative investors.

To us, Altria's five-year total returns of over 24.20% annually is testament to the fact that investors don't need fast-paced tech stocks to garner huge returns. Altria beats the total returns of tech titans like Apple (18.2%) and Microsoft (21.29%) in the same five-year period.

Given its premium position in the cigarette/tobacco segment, Altria's tobacco divisions like Philip Morris USA, US Smokeless Tobacco, John Middleton, and NuMark will hold onto their respective positions in markets. Long-term returns from Altria have left little reason to complain.

Trading at less than 20 times forward price/earnings, Altria's shares offer a stable opportunity to make the most of the tobacco industry's growth and recycle the cash generated in the form of strong and stable dividends.


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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.