Philip Morris International

PM-N

It is a consumer staple product. This is not its period of seasonal strength. It has broken above recent highs. It is out of season so he would not get into it. But if you have it then hold until it breaks down. Aug. to Oct. are the prime months for the tobacco companies.

(Market Call Minute) Their product is in a secular decline.

The industry could see continued consolidation. Volumes in North America continually go down, but they increase their pricing because it is an adductive product. Be careful of interest rate sensitivity to this one because investors use them as an income play. He likes it in a diversified portfolio.

Because revenues are coming from overseas and the US$ is moving higher, this stock is getting hurt, and it might continue to get hurt if the US$ continues moving higher. He thinks it will. Valuation is expensive for a lot of these names, and they are starting to come off because of that. Growth rates are very, very low.

Market Call Minute. Cigarette consumption is on a secular decline.

A higher dividend yielding company. More than 4% dividend and a little bit of growth, but not quite high enough for him. It should do well for the remainder of the year.

(Market Call Minute.) They throw out a lot of free cash flow. Not expensive, but there is very little growth.

They have an innovative smokeless tobacco that he feels has huge potential. It had been hurt by the strong US dollar.

A cigarette company and has done very well. This was a split with Altria Group (MO-N) being the North American side and this being the International side. They throw up tons of free cash flow and have a great yield. The International has less restrictions. Incredibly well run. Dividend yield of 4.18%.

This company has a very good dividend yield, expanded its market share and came up with E cigarettes which has created a bit of excitement. If you are looking for a very safe dividend and a company with moderate growth, this is not a bad investment.

She doesn’t buy cigarette stocks in general because the industry is in a secular decline, even though they generate a lot of cash. This is a very defensive name with a high yield, but you can get that yield in other companies that are in a more positive growth industry.

They are not the same as they were in the earlier years. They used to take cash from tobacco and invest in growth businesses. Now they can pay out dividends or buy back stock with it. It won’t be a great growth company, but it will be safe like a bond. Don’t sell it. He would not buy it because there is no growth.

They have diversified into some food businesses. Smokeless tobacco has not been that big for them. 4.8% yield. You can go to other sectors without the same degree of risk.

Scores really well on a relative price momentum basis and volatility. A little expensive at 12X EBITDA and 18X price to free cash flow. Good yield of 5.2%. Balance sheet is in great shape. He would be comfortable holding this here.

An industry that is in secular decline with a lot of regulatory pressure. Over the long-term he doesn’t think it is a business that you particularly want to be invested in. Sentiment is swinging even more towards anti-smoking and anti-tobacco products. He would avoid this stock.