I did not want to wait for MO to drop to $20 per share, so this morning I raised my buy price to $20.90. The stock strike price hit at 3:55 PM just before the market closed. MO is paying a dividend $1.40 per share or over 6.6%.
This is in addition to my current holdings of MO. (I was holding 25% of my target allocation due to the spin off last March).
The Street has a Buy Rating on MO
The company’s strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, revenue growth, expanding profit margins and notable return on equity. The company’s strengths can be seen in multiple areas, such as its solid stock priceperformance, growth in earnings per share, revenue growth, expanding profit margins and notable return onequity. Source: The Street
Standard & Poors has a Strong Buy Rating
Our 12-month target price of $24 is based on historical and peer forward P/E multiples. We apply a multiple of 12X, slightly below the average historical forward P/E, but a slight premium to the peer-average forward P/E of 11.5X, to our 2011 EPS estimate to calculate our target price. The shares recently provided a dividend yield of over 6%.
Summary of MO: Philip Morris U.S.A. (PM USA) is the largest U.S. tobacco company, with total U.S. cigarette shipments amounting to 148.7 billion units in 2009 (down 12.2% from 2008), accounting for 49.9% of total U.S. cigarette market shipments (down from 50.9% in 2008). Focus brands include Marlboro (the largest selling brand in the U.S.), Virginia Slims and Parliament in the premium category, and Basic in the discount category. In January 2009, Altria completed the acquisition of UST Inc., the largest U.S. manufacturer and marketer of smokeless tobacco products, for $11.7 billion, which included the assumption of about $1.3 billion of debt.