Summary
- Tobacco names were hit hard after news broke in late 2018 regarding a possible menthol ban.
- Cigarette sales are on the decline for the company, but other opportunities lurk.
- The JUUL acquisition of $15 billion was not received well from investors, which added to the late-2018 sell-off for the company.
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Altria Group Inc. (MO) has long been a stalwart in many dividend growth portfolios for a number of years. Though the company operates in what many label the “sin industry”, they have successfully been able to increase cash flows in a time when cigarette volume sales have continued to decline. However, over the course of the last two years, the stock has vastly underperformed the market, losing 27% of its value compared to the S&P 500 gaining 12%.
Source: YCharts
Based on the recent plunge in the stock price, does this represent a great entry point or a value squeeze? Let’s take a look in greater detail.
