Archive

Posts Tagged ‘marlboro’

Philip Morris International (PM)

March 17th, 2009
No comments
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?

  
 

consumer goods , , , , , ,