Why Financial Pros Search This Eroding Business

[View in browser]( [The Juice Logo] BROUGHT TO YOU BY: [Logo]( Editor’s Note It’s Friday. Time to give you a stock pick from our sister newsletter, The Spill, so you can think about it over the weekend and maybe make a move Monday morning. While The Juice helps you be better with money across the board, The Spill focuses on stocks financial pros are researching and judges how good of buys they are. If you’re already sold, you can sign up for The Spill – for free – here. [-facebook-share]( [-twitter-share]( [-linkedin-share]( [-email-share](mailto:?body= %3Cbr+%2F%3E%0A%3Cb%3ENotice%3C%2Fb%3E%3A++Undefined+property%3A+stdClass%3A%3A%24previewText+in+%3Cb%3E%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheJuiceAlternate%2Fautomate-ic-article.php%3C%2Fb%3E+on+line+%3Cb%3E98%3C%2Fb%3E%3Cbr+%2F%3E%0Ahttps%3A%2F%2Finvestingchannel.com%2F%3Fp%3D588472?utm_medium=ic-nl&utm_source=111818 ) Proprietary Data Insights Financial Pros’ Top Tobacco Stock Searches in the Last Month Rank Name Searches #1 'Altria Group 177 #2 'Philip Morris International Inc 36 #3 'British American Tobacco Industries 13 #4 'Vector Group Ltd 11 #5 'Turning Point Brands 6 #ad [It's time you learn about Alternative Investments!]( Brought to you by [Masterworks]( [98% of the rich invest 5%+ in art – you can too]( [Masterworks - 98% of the rich invest 5%+ in art – you can too]( One reason the ultra-rich aren’t worried about a global economic meltdown? Their financial futures are protected in alternative assets that can withstand market turmoil. For example, according to a report by global investment bank UBS, 98% of rich collectors reported investing at least 5% of their total wealth in art, with some investing over 50% in art! But you’re probably wondering: how is the average investor supposed to get access to an asset that has been the exclusive domain of the ultra-rich for centuries? The answer is Masterworks, an award-winning platform for investing in shares of multi-million dollar art. It's not just easy to use – Masterworks has completed 14 exits on their artwork, all of them profitable, with the last three delivering net annualized returns of 17.8%, 21.5% and 35% to investors. Today, you can use this exclusive link to skip the waitlist. [Skip the waitlist]( *See important Reg A disclosures at [masterworks.com/cd](. Why Financial Pros Search This Eroding Business Smoking is in perpetual decline in America. In the year 1965, 50.1 million U.S. adults smoked. Today, it’s less than 20 million. So, why do financial pros keep searching out Altria (MO)? The company is a cash cow, pumping out $8.8 billion in free-cash-flow per year, or $5.35 per share. Between dividends and buybacks, it yields a bit more than 10% each year. But with $27 billion in debt and slowing growth, is 10% safe and worth your money? Altria’s Business Creators of the Marlboro Man, Altria Group, is one of the largest players in the tobacco industry, with its hands in cigarettes, cigars, smokeless tobacco, and oral nicotine pouches. In 2008, they split from Phillip Morris, which took the international portion of the business. Altria primarily serves the U.S. market. What many people don’t know is that the company also holds interests in wine, beer, cannabis, and e-cigarettes through stakes in Anheuser-Busch InBev, Cronos Group, and JUUL Labs. The company segments its business as follows: - Smokeable Products (85% of total revenues) - Production and sale of cigarettes and cigars, the backbone of the company’s earnings. - Oral Tobacco Products (10% of total revenues) - Encapsulates moist smokeless tobacco and oral nicotine pouches, with products like on!, showing promising growth. - Wine (2% of total revenues) - Features premium wines sold under various brands, reflecting the company's diversification strategy. - Other (3% of total revenues) - Investments in companies like Anheuser-Busch InBev, Cronos Group, and JUUL Labs, and corporate expenses, showcasing Altria's reach into different markets. Despite a massive writeoff in Juul several years ago, Altria’s done well stabilizing its business, leveraging price increases to improve sales and margins. Financials [Financials] Source: Stock Analysis Revenues typically grow primarily due to price increases, not higher volumes. The company hoped its investments in cannabis and Juul would drive new growth. Unfortunately, the legal system got in its way. Notably, margins improved over the last decade by almost 10% from gross down to profit margin. While the company holds $26.3 billion in net debt, it pays less than 4%, easily payable with its cash flow. Valuation [Valuation] Source: Stock Analysis Despite the high dividend payout, Altria trades at a low P/E and price-to-cash flow ratio, even compared to many of its peers. Phillip Morris (PM), the international arm, trades at higher multiples despite having similar growth. Other peers like British American Tobacco Institute (BTI) trade at lower multiples and demonstrate higher revenue growth. Growth [Growth] Source: Seeking Alpha Vector Group Ltd (VGR) pulled in the highest revenue growth last year. However, it’s been struggling over the last several. Turning Point Brands (TPB) and MO both saw revenue decreases last year. However, MO expects to temper those in 2023. Profitability [Profit] Source: Seeking Alpha Altria’s margins are the best across the board. That’s interesting, given the discount it trades at relative to several competitors. [A Daily Stock Pick With Professional Analysis]( Searching for the right stocks to buy is exhausting. At The Spill, we have you covered with ratings and expert analysis – direct to your inbox. [Sign up today]( Our Opinion 9/10 Social issues aside, Altria trades at a nice discount. Management is very shareholder friendly and expects to cover share buybacks and the 8.5% dividend without a problem. Will this stock double anytime soon? Unlikely. But it should offer steady returns for a long-term investor. 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