For immediate release
Chicago, IL – February 16, 2022 – Today Zacks Investment Ideas features: Philip Morris International Inc. PM, Altria Group, Inc. MO and British American Tobacco plc BTI.
3 Defensive Stocks Hit New 52-Week Highs
The market has been tough for investors as both bulls and bears have been frustrated with the recent ups and downs of action and daily volatility. Stocks rose this morning on news of a possible de-escalation in the Russian-Ukrainian conflict.
But for the most part, stocks slid to start the new year. When stocks go down, most investors will justify buying falling stocks because their favorite stocks become cheaper. While amateur investors tend to chase down depressed stocks hoping for a quick turnaround, experienced investors will adapt their strategies to the volatile market environment and in turn can reap substantial profits. Even if the major indices decline, their stock selection process allows them to outperform the market.
Let’s see which sectors have held up the best throughout the first month and a half of this year.
The top three sectors each easily outperforming the overall market this year are energy, financials and consumer staples. Energy is a little stretched out right now and pulls back today as commodities pulled back across the board.
Financials and consumer staples are attractive in the current environment, and today we’re going to focus on three core stocks that have shown immunity to volatility and are all trading at or near highs. of 52 weeks. All three stocks provide a healthy dividend north of 4.5%, providing additional income during a period of heightened market uncertainty.
Philip Morris International Inc.
Philip Morris is an international leader in the tobacco industry. The company manufactures and sells cigarettes, other nicotine-related products, and related electronic devices and accessories. PM sells its cigarettes under recognized brands such as Marlboro, Parliament, Chesterfield and Bond Street.
Additionally, its heated tobacco and vapor products include licensed brands such as HEETS, Fiit and Miix. PM markets and sells its products in Europe, the Middle East, Africa, Asia, Australia, Latin America and Canada. Philip Morris was founded in 1847 and is based in New York, NY.
The tobacco giant has undergone a business transformation in recent years as the company faces a consumer landscape that emphasizes health consciousness. As such, PM has expanded its presence in the Reduced Risk Product (RRP) category. RRPs have accounted for about 30% of the company’s total revenue in recent quarters. Despite the push towards more socially acceptable options, the PM fuel category still remains its biggest contributor to sales.
Earnings have been a bright spot for PM as the company has exceeded estimates in each of the past 16 quarters. The Prime Minister recently reported fourth quarter EPS earlier this month of $1.58, a surprise +2.6% from the consensus estimate of $1.54. The company has delivered an average earnings surprise of +5.14% over the past four quarters, supporting the stock’s 34.6% return over the past year.
PM enjoys an attractive dividend yield of 4.58%, adding a nice complement to the bullish case. Earnings forecasts look bright, with analysts expecting EPS growth of 3.29% to $6.28 in 2022. Things look even better for 2023 as Zacks’ consensus estimate calls for EPS of $7.00. This would represent an 11.5% growth from the 2022 consensus estimate.
Altria Group, Inc.
Altria Group is a tobacco manufacturer and sells cigarettes, oral tobacco products and wine in the United States. In 2008, Philip Morris International was separated from the Altria group. However, Altria still operates as the parent company of Philip Morris USA, which continues to be a subsidiary of MO.
The company offers cigarettes and cigars under well-known brands such as Marlboro and Black & Mild, respectively. MO’s smokeless tobacco products are sold under the Copenhagen, Skoal, Red Seal and Husky brands. Altria Group was founded in 1822 and is based in Richmond, Virginia.
Similar to PM, Altria Group has evolved with changing industry dynamics. A more health-conscious consumer has paved the way for the tobacco maker to go beyond traditional cigarettes and expand its presence in the smokeless category. Revenue from the company’s oral products has steadily increased. MO earnings have followed suit and the trend looks set to continue in the years to come.
MO has exceeded earnings estimates in 3 of the last 4 quarters, with an average surprise of +1.21% over this period. Stocks have risen almost 25% over the past year and have held up extremely well in recent market volatility.
The Zacks consensus estimate for 2022 EPS calls for growth of 5.21% to $4.85. With a healthy dividend yield of 7.19% and a relatively undervalued P/E of 10.34, the bulls should drive the stock higher in the near term.
British American Tobacco plc
British American Tobacco is a holding company that supplies tobacco and nicotine products to consumers around the world. BTI offers combustible, vapour, heating tobacco and oral nicotine products. The company distributes its products through points of sale. British American Tobacco was founded in 1902 and is based in London.
BTI pays a sustainable dividend of $2.90, which equates to a dividend yield of 6.22%. The company is relatively undervalued (9.69 forward PER) compared to its industry group (9.93). Shares of BTI rose significantly to start the new year, climbing nearly 25% through mid-February.
For the current year, Zacks’ consensus estimate calls for EPS of $4.81, translating to 6.42% growth over 2021. Sales are expected to climb 9.02% for reach $36.08 billion.
These three tobacco companies have outperformed and are looking to continue this trend this year.
Zacks names ‘only one best choice for doubling up’
From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.
It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could jump in at any moment.
This company could rival or surpass other recent Zacks stocks which are expected to double, such as Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one. year.
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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.
5 shares ready to double
Each was handpicked by a Zacks expert as the #1 preferred stock to earn +100% or more in 2021. Previous recommendations have skyrocketed +143.0%, +175.9%, + 498.3% and +673.0%.
Most of the stocks in this report fly under the radar on Wall Street, which provides a great opportunity to get in on the ground floor.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.