This is not my personal DD, but I share the same sentiments as the author:

https://charioteerinvesting.com/altria-smoke-em-if-you-got-em/

Position: 1,050 shares @ cost basis of 39.49

Main takeaways:
Altria is in the dying tobacco industry, but easily makes up for lost revenue by increasing prices. Very few companies have the ability to continuously raise prices without losing market share. Altria does it multiple times a year to retain profitability.
They have dominant market share (They own marlboro)
They are well primed to pivot into the cannabis industry with their stake in $CRON.
They have a much healthier balance sheet than other popular cannabis plays such as $TLRY, $ACB, $SNDL and what I would consider a "sleeper" cannabis play. They are already profitable, and if Altria plays their cards right, they should be able to swoop in and take a chunk of market share when cannabis is legalized in the USA.
They pay over a 7% dividend.

The stock has been showing excellent relative strength to the market, it has been unaffected by the recent sell-offs; it has continued to climb up. Excellent value stock with great growth potential if they make the right investments and acquisitions.

This post was edited by ta909 on Mar 10 2021 03:48pm

I was listening to a report a few months ago that said Tobacco is incredibly profitable right now as smoking is still strong in the developing world. I'll definitely look at this, even if it makes me feel icky buying a tobacco company lol. 7% dividend is a real eye catcher for me.

This post was edited by Thor123422 on Mar 11 2021 02:52pm

I am long MO.

Their moves into cannabis and Juul haven't gone very well, but their underlying financials are far too strong to support any price <$50. Management is very good at driving EPS growth, and that's critical when you operate in an industry in secular decline. Their stake in AB InBev helps insulate earnings from declines in smokeables, and the non-smokeable section is promising (e.g. new nicotine pouches, reduced risk heated tobacco). The Juul fiasco is completely baked in, so the price has upside if they manage to navigate those regulatory hurdles. It remains to be seen how big of a player they become in the Cannabis market, but suffice to say that they intend to market weed and weed/tobacco products in the future once it's legalized at the federal level.

I would not invest in the Tobacco industry for the following reasons:

- the demographics of smokers are heavily weighted towards the older generation. Millennials and Gen Z rates of smoking are far lower
- as countries become more developed over time, smoking rates will reduce
- you are literally killing your own customers by selling them products, thus shrinking your customer base
- tougher regulatory measures being considered by the FDA and other countries on vaping products

I bought some BAT shares two years ago and they've been my worst performer, but you do you boo

Yes, tobacco use has been on a decline for several years. However, Altria's revenue still goes up due to having the luxury, that few businesses have, of increasing prices. They increase prices several times a year of a couple pennies to boost revenue growth. The play to look for here is a pivot into the marijuana industry, in which they have a much more solid foundation than unprofitable cannabis names.

Not sure where you're getting your data from, but Millennials have some of the heaviest smoking rates, percentage wise. Source: https://www.cdc.gov/tobacco/data_statistics/fact_sheets/adult_data/cig_smoking/index.htm

Tobacco is a dying industry, but is definitely not on the precipice of disaster just yet, as younger generations (millennials, gen x) still are heavy consumers of the product. The decline has been slow and steady, allowing Altria to adjust prices to remain profitable, and even grow as a company. This gives them a big advantage to pivot into the upcoming marijuana boom over the popular marijuana companies that have horrific looking balance sheets.

This post was edited by ta909 on Mar 14 2021 10:10am

For context, Altria's diluted EPS has grown from $2.80 (2015) to $4.36 (2020). That is on top of earmarking ~80% of its FCF towards dividends.

The company has demonstrated an ability to grow earnings in a revenue declining industry. There will eventually be a point at which this is impossible, but we are not there yet.

If management is smart they’d use the tobacco cash cow business unit to grow their weed business unit.

As the latter grows as a % of revenue the stock price could get a massive bump as market starts looking at the company as a weed play which are ‘hot’ atm and trade at growth multiples rather than a dying out tobacco company.

Management has tried to do this with Juul (vaping) and Cronos (weed). It's hard. They need to make sure that the investment is well spent. Those markets are still in their infancy, small capital allocations are probably better than large ones. Thus far I'm not impressed by their ability to deliver on those promises, and so my expectations are limited to what I know they can provide via their existing business models.