Summary
- Altria shares sold off quite hard due to an analyst downgrade and news of FDA scrutiny on the e-cigarette market.
- While I believe the company does face significant pressure in its core business, at this point, the risk may be priced in.
- Management has made questionable moves, but for investors willing to take risk and collect a dividend, now may be the time to start a position.
I have been openly taking the opposing view on Seeking Alpha as many investors believe Altria (MO) can do no wrong. In December, I wrote an article stating that Altria was cheap and offered a nice yield. (See: Altria Is Cheap With A Juicy Yield). Shortly thereafter, I sold my shares luckily before they dropped. I believed the deals they made were quite expensive and offered little immediate ROI. While the deal would have been good for the company at a lower price or better terms, this just doesn't seem attractive for shareholders at this price. In fact, I was looking forward to the deals Altria was going to make in both the marijuana space and the e-cigarette space. That being said, I believe even with a negative, forward-looking story, there becomes a point where the shares price in the risk and are worth what I would call a speculative buy. We shall review the deals again below and why the valuation seems enticing here.
