Philip Morris International (PM)

A Top Pick (May 2/13. Down 2.17%.) Over time, this company has generated a lot of value for him. The stock has been down because of currency movement. It is a very international company.

Doesn’t see growth in the industry. Globally he is seeing a declining smoking rate. Has a hard time investing in a business that is so bad for you.

Likes this over the long-term. Had a bit of a pull back over the last year, primarily because of foreign exchange, but looking back over the last 10 years, it is one of those great consumer product companies that just generates gobs of free cash flow. At these levels, it is becoming it pretty compelling investment.

Everyone is aware of the health concern. Play on Indonesia and Vietnam because they are big smokers there. Prefers BTI-A.

Cash generating machine. The long term growth outlook is not so robust in developed markets. Growth in emerging markets. Going to underperform in this environment. It is more defensive. Not interested in that category which will decline in the long term.

The best time is in the summer time until the end of the year. We are in a downtrend and it might set up.

The attractive thing about this is the dividend yield. As interest rates start to rise, dividend attractive companies have less appeal. The company itself is still doing very well. Internationally there is more and more resistance to smoking. However, 20% of the people globally still smoke. Outside of China, this company controls about 29% of the market. They have also moved aggressively into electronic smoking. At 14.5X earnings, this is a pretty good place to be.

Likes this as a good solid dividend payer. Despite the fact that there is a 3%-4% decline in cigarette consumption on an annual basis, they have done a tremendous job of harvesting their cash flow. Japan had increase the excise tax, which has diminished demand and resulted in an intense price competition internationally. This is a really good entry point. In the last 5 years, their dividend is up 18%. Yield of 4.58%.

(Market Call Minute) Weakened off and short term outlook has come down but not long term. Take advantage of that.

Yielding a little over 4%. Earnings and cash flow growth is in the 9% range. Not a cheap stock right now. Cigarette companies have margins that are in the 60%-70% range so they don’t have to grow their revenues to have it flow to the bottom line in profitability. Debt to equity ratio is only at 61% so they can leverage the balance sheet and buy back shares if they want. Prefers companies that increase dividends rather than buying back shares.

Has done very well. Really represented a good place to hide. Great distributions through their dividends. Altria (MO-N) is the domestic (US) side of the tobacco play and has much, much more regulatory risks. Growth is decent and the dividend is good.

Recently sold his holdings because he had had a tremendous return. Tobacco stocks are very defensive and he didn’t want to be that defensive. As interest rates creep higher, the stock essentially rolls over. A better entry point would be around $80.

4% dividend is good, but not great. A few acquisitions were put together. But he does not like the cigarette business. Too many laws working against you and getting worse. There is a trend toward people getting healthier. It has a beta of 1 so it may not be that defensive. Not a lot of growth potential.

(A Top Pick May 2/13. Down 10.99%.) Good Steady Eddie type of company. If the stock got under $80, he would be buying more.

They've taken their profits so no longer own it. But still likes it.