| Philip Morris International (PM) manufactures and markets cigarettes and tobacco products outside of the U.S. It’s an incredible and appealing strategy. Sell an addictive and high margin product in parts of the world where you’re much less likely to be devasted in court than you might be here in the U.S.
In addition to many local brands that vary by country or region, Philip Morris brands include Bond Street, Chesterfield, L & M, Lark, Marlboro, Parliament, and Virginia Slims. Markets in which they operate include Africa, Asia, Canada, the EU, and Latin America.
I don’t often use long quotes, but quite frankly, I don’t know if I could ever say this better than Kiplingers recently did.
“Philip Morris International (symbol PM) was born in March 2008, when it was spun off from Altria. PM is a U.S. company, but it books all of its sales abroad (in 160 countries), where tobacco consumption continues to grow. . . .
The beauty for shareholders is that Philip Morris is a fantastically profitable business. Its return on equity is a towering 55%, and the company generates immense amounts of free cash flow (capital-investment requirements are minimal for cigarette companies), most of which is returned to investors through annual share buybacks and a steadily rising flow of dividends. The company is targeting annual growth in earnings per share of 10% to 12%. At the February 6 closing price, PM shares yielded a healthy 6%.”
So today PM is trading at $37.97, with a PE under 12 and a yield of 6%. It’s been awhile, but I think I’ve finally found an individual stock I can buy with some confidence. What do you think? |
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consumer goods
cigarettes, international, marlboro, Philip Morris, PM, tobacco, vice
The Home Depot (HD) is the largest home improvement specialty retailer in the world. That’s the good news–and the bad news. On the positive side, they are the gorilla in the home improvement world room, with well over 2,200 locations throughout the U.S., Canada, China, and Mexico.
On the negative side, well… I’m not sure how to put this. I really can’t say much about Mexico, and I actually like the longer-term outlook for both Canada and China, but I am much less confident about the U.S. Sure, the Fed Chairman and the tax-cheat at treasury continue to assure us, but it just feels to me like they’ve got a tiger by the tail and don’t know how to let go without being eaten alive.
Then Warren Buffett tells us not to bet against the U.S. I know he’s a genius, or at least the investing equivalent, and I don’t question his integrity. Still, nothing like this has happened in his investing lifetime, and I’m not sure that even he understands what the results of this crash and bailout will be when when all is said and done.
So today, trading at $21.68, and with a dividend of 3.9%, I think Home Depot is probably the most appealing buy in the home improvement area. I just can’t see my way clear to invest now in a stock so dependent on credit, home prices, and the overall U.S. economy.
consumer goods
consumer goods, economy, HD, Home Depot, home improvement
