On this week's ISM PMI report, the fastest-growing industry for September was "Food, Beverage, and Tobacco." So I looked at the tobacco space over the weekend and noticed that the tobacco company Altria recently made a fairly large price correction and looks to be making a U-shaped bottom, with an imminent bullish cross on the MACD. With the positive technicals and positive economic data for the sector, it looks like a pretty good buy.
Plus, fundamentals and sentiment look fairly good, too. Altria pays a 9% dividend, and its earnings, sales, book value, and free cash flow are currently priced an average of about 37% below the median price for the last three years. Investors have been discounting tobacco stocks due to competition from e-cigarettes, but the reality is that Altria is poised to capture market share in the e-cig space too, with a couple hundred vape-related patent filings over the past few years. In terms of sentiment, there's 23% upside to the average analyst price target, according to TipRanks, and the Equity Starmine analyst summary score is 9.2/10. Options traders are bullish, with more than twice as many calls as puts.
Consumer staples and dividend payers tend to outperform in a recession, so Altria has potential as a defensive hedge should the recession double dip.
Plus, fundamentals and sentiment look fairly good, too. Altria pays a 9% dividend, and its earnings, sales, book value, and free cash flow are currently priced an average of about 37% below the median price for the last three years. Investors have been discounting tobacco stocks due to competition from e-cigarettes, but the reality is that Altria is poised to capture market share in the e-cig space too, with a couple hundred vape-related patent filings over the past few years. In terms of sentiment, there's 23% upside to the average analyst price target, according to TipRanks, and the Equity Starmine analyst summary score is 9.2/10. Options traders are bullish, with more than twice as many calls as puts.
Consumer staples and dividend payers tend to outperform in a recession, so Altria has potential as a defensive hedge should the recession double dip.