Recent Buy

What a busy month for me! A couple of weeks ago, I purchased shares in Target Corporation (TGT) and figured that might be it for the month. I actually think successful investing should be akin to watching paint dry or grass grow; it just shouldn’t be that exciting. However, I ended up buying and selling much more this month than I initially anticipated. I sold my entire position in Intel Corporation (INTC) after the seventh straight quarter with no dividend raise, and subsequently added to my position in The Coca-Cola Company (KO) and initiated a position in Omega Healthcare Investors Inc (OHI).

I don’t expect this type of activity to continue throughout the year. I like boring months where I make a purchase or two, reinvest dividends and march ever closer to early retirement. However, the recent pullback in the broader market, and more specifically shares in high quality companies I regularly track made it tough for me to ignore some of the deals I was starting to find. And one company in particular forced my hand, as I dipped into my reserve capital and made yet one more stock purchase for the month of January.

I purchased 15 shares Philip Morris International Inc. (PM) on 1/30/14 for $79.14 per share.

Philip Morris International is the world’s largest publicly traded manufacturer and seller of cigarettes and other tobacco products, with sales in approximately 180 countries. PM owns many major brands, including: Marlboro, Parliament, L&M and Chesterfield. Marlboro contributed 33% of total volume in 2012.

I’ll be honest and say that I wasn’t particularly interested in adding to my investment in Philip Morris because it’s already one of my largest positions, at approximately 5.5% of my portfolio. Furthermore, I have a rather large allocation to tobacco in general.

However, shares in PM have continued to slide downward week after week in a steady decline that started at the end of 2013. It appears that after Standpoint Research initiated analyst coverage on Philip Morris at the beginning of January and one of their analysts, Ronnie Moas, rated PM as a sell citing moral concerns that shares in PM accelerated their trend downward. Over the last 30 days PM shares are down -10.32%. That compares quite unfavorably to the S&P 500 over this same time period – down some -3.5%. However, it’s this kind of underperformance from a high quality company like Philip Morris that gets me very excited. When everyone else is fearful it’s often not a bad idea to be greedy, assuming the fundamentals are solid and a company is qualitatively attractive.

Overall, the fundamentals remain strong here. Philip Morris presented at the 2013 Morgan Stanley Global Consumer Conference and I liked what I saw. Management continued to warn of currency headwinds, but currency fluctuations tend to even out over the long haul. They revised guidance for 2013 with a diluted EPS range of $5.37 to $5.42. They had some great slides showing that while volume declines worldwide in the general tobacco industry have been notable over the last few years, the company has been able to mostly weather this storm quite well. Moreover, the company has managed to increase its market share of the international cigarette market substantially over this time period, up from 25.5% in 2008 to 28.8% in 2012.

Philip Morris has only been a publicly traded company since 2008, after being spun off from Altria Group Inc. (MO) to protect shareholder’s interests and allow the international arm to focus on operations without worry of U.S. litigation. Earnings per share have grown at a compounded annual rate of 11.71% during the 5-year period from 2008-2012, up from $3.32 to $5.17. In addition, revenue has a CAGR of 5.11% during this same time frame – increasing from $25.7 billion to $31.3 billion. These are rather robust growth rates considering that Philip Morris has to continually deal with volume declines industry wide. Forecasts call for a -2% to -3% volume decline across all international markets (excluding China and U.S.) for the cigarette industry in 2014.

The dividend growth has also been very healthy. Philip Morris has a 6-year track record of dividend growth, and the raises have been substantial. The 5-year dividend growth rate currently stands at 28.4%, but going forward I expect lower, but still healthy raises in the high single-digits to low double-digits. The yield on shares at my price is 4.75%.

The payout ratio currently stands at 71%, so there is room for dividend growth before the payout ratio becomes troublesome, especially with continued robust growth in EPS. The company does target a 65% long-term payout ratio, so EPS will have to continue growing to substantiate further dividend raises. The dividend is also comfortably covered by free cash flow, with a payout ratio against FCF at 68%. And speaking of FCF, Philip Morris is a cash flow machine. PM manages to convert revenue to FCF at extremely attractive rates, and currently leads many other high quality companies like Johnson & Johnson (JNJ), The Coca-Cola Company (KO) and McDonald’s Corporation (MCD) in terms of free cash flow as a % of net revenues – currently at 29.1%, from 2008 to September 30, 2013.

And it’s not just cash dividends that Philip Morris uses to reward shareholders, as they’re also currently in the midst of a massive buyback program – using low-cost debt to do so. The company initiated a 3-year $18 billion share repurchase program in late 2012, and I find the pullback in shares as an opportunity for not only me to increase my position in this cash cow, but also for management to buy back shares at advantageous prices.

The balance sheet is a weakness for PM, with over $17 billion in long-term debt, as the aforementioned massive repurchase plan has added debt at the cost of buying back shares. Overall, management appears to be prudent with this maneuver as it allows the company to take on debt at historically low interest rates to retire shares that would otherwise pay out a high dividend. However, the interest coverage ratio remains high at 16 so Philip Morris can easily cover its interest obligations here.

One major wild card here is China. Currently, PM has a deal for licensed production of Marlboro in China (2.0 billion units in 2012) and an international joint venture with China National Tobacco Corporation (CNTC). However, this deal is just a tip of the iceberg when it comes to potential in China. Cigarette industry volumes are expected to reach 2.5 trillion units in 2013, so it’s a market with massive potential but, unfortunately, mostly controlled by a state-operated monopoly.

Growth could also come by way of electronic cigarettes (e-cigs) and next-generation reduced-risk products. Philip Morris has determined 2014 to be an investment year in the company, as it develops manufacturing capacity for 30 billion units of its reduced risk products and rolls out commercial pilot tests in select cities in the latter half of the year. The company plans on rolling out its first next-generation product (branded Platform 1) in early 2015 after numerous clinical trials. Philip Morris International has also formed a strategic partnership with its domestic counterpart Altria Group Inc to commercialize reduced-risk products and e-cigs. The company plans to launch an improved-taste e-cigarette in 2014, and the growth potential here is pretty substantial if the U.S. is a good example for the global market.

Philip Morris continues to execute and leverage its competitive advantages, including a dominant brand in Marlboro which allows it pricing power and scale in the face of rising excise taxes and increasing regulation across the globe. It maintains strong cash flow, robust dividends, a strong buyback policy and growth looks set to continue with traditional tobacco products, reduced-risk next generation products and e-cigs. S&P Capital IQ predicts 9% EPS CAGR over the next 3 years.

However, risks are certainly high with the aforementioned litigation and excise taxes. While these produce a high barrier to entry, they also make it more and more difficult for the company to pass on hikes as eventually it is hard for consumers to afford some of the premium products that Philip Morris markets. This is partially offset by the breadth of products and geographical diversification across the globe, so that no one market can dominate PM’s growth profile. Additional risks remain in plain packaging mandates, recently passed in Australia and considered in other major markets throughout Europe.

Shares in PM are currently trading for a P/E ratio of 14.8, which is favorable to the 5-year average at 15.7. Considering the growth potential of this company, and the broader market’s run over the last year, I consider PM shares to be quite attractively priced here. I valued shares using a typical Dividend Discount Model analysis with a 10% discount rate and a lowly 6% long-term growth rate (substantially lower than PM’s historical average) and using the preceding input the fair value on shares comes out to $99.64. I’d be comfortable with saying the margin of safety on shares at today’s price is at least 15%, assuming the company continues executing properly.

This purchase adds $56.40 to my annual dividend income total based on the current quarterly payout of $0.94 per share. With the addition of these shares, I now own 115 shares of Philip Morris International.

My portfolio still currently holds 43 positions, as this was an addition to an existing investment.

I’m going to include current analyst valuation opinions below, as I use these to concentrate my reasonable valuation estimate.

*Morningstar rates PM as a 4/5 star valuation, with a fair value estimate of $93.00.
*S&P Capital IQ rates PM as a 4/5 star Buy with a fair value calculation of $76.00.

I’ll update my Freedom Fund in early February to reflect my recent addition.

Full Disclosure: Long TGT, KO, OHI, PM, MO, JNJ, KO, MCD

Are you interested in PM at today’s prices? Think it’s too good to pass up, or are better deals elsewhere?

Thanks for reading.

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

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62 Comments

  1. Not a bad add at all Jason. I’ve considered PM a buy at anything below $85 and they’ve plowed through that and then some. Just not enough capital to around considering some of the price movements we are seeing these days. CVX (dreamy drop today) and UL are high on my list these days.

  2. Great purchase, and thanks for the additional information about upcoming opportunities in China and reduced-risk products. I am not sure if they will every be able to break the monopoly in China, but if they do I will be a happy shareholder. I currently own PM in my son’s Coverdell ESA, and I am considering adding to that position next week with the 2014 contribution.

  3. Charles,

    Altria has done incredibly well in the face of volume declines. They’ve managed costs very well and done the best they possibly can. However, I feel in the long run PM simply has much more opportunity to grow. Time will tell, however.

    I own both, so I hope both continue to do well. But I do watch MO much more carefully.

    Best wishes!

  4. w2r,

    I got interested in adding to my position when it broke below $85 as well. Seeing it drop toward $80 started getting me excited. I finally bit when it dropped below that mark. It’s trading well above my cost basis, but I think the long-term opportunities makes this is a great buy at this price.

    CVX and UL are high on my watch list as well. UL has been a near-buy for me for months now, while CVX became attractive after today’s sell-off following the miss.

    Cheers!

  5. AAI,

    I agree with your watch list there. This minor pullback has definitely opened up some opportunities. A stock like PM is especially attractive as it was already dropping for seemingly no reason, and then you have a pullback to drop it further. That’s always very nice!

    Great buy on CVX. I own 40 shares now, but very willing to add to it at these prices.

    Best regards.

  6. The Dividend Guy,

    I would consider PM the better choice out of the two for the long haul. Anything can happen over the next few quarters or so, but I think if you’re investing for the next decade or two PM simply has more growth opportunities abroad. Time will tell!

    Take care!

  7. DM, I like what I see here. The only thing that concerns me with tobacco companies is the continued decrease in volume worldwide in the general tobacco industry. I have been looking at PM for a while now and may initiate a position once I fresh capital. I am also looking at 5 other companies that have seen nice pullbacks from their 52-week highs. i am currently writing an article showcasing the pullbacks in the companies. Congrats on the buy. You are now $56.90 closer to financial freedom.

    Dividend Prodigy

  8. Jason,

    Thanks for stopping by.

    Yeah, China remains a big wild card. There is tremendous potential there, so it’s really just icing on the cake. Making even extremely small inroads into China will be huge for PM over the long haul. I think they’ve got a lot of things to be excited about with the next-generation products. The Philippines remains a difficult market with the tax situation, but you have to imagine that will eventually straighten itself out.

    Good luck!

    Best wishes.

  9. Prodigy,

    Volume declines have been an issue for many years, but PM has found ways to counteract this. Not only have they done better than the industry in that regard, but they’ve continually increased their market share. They’ve navigated the waters very well. In addition, the new products provide a new growth avenue and China still offers huge potential.

    And you’re right! I just bought a few hours of permanent freedom with this purchase. Every minute adds up! 🙂

    Best regards.

  10. I expect you’ve picked up a good value here. I haven’t been able to pull the trigger on tobacco stocks yet – a function of my anti-smoking attitudes, I guess. The big question I have with PM is the increase in debt since the spin-off.

  11. I like the idea of the smokers paying me to smoke, since nothing else seems to make ’em bat an eye! So far it seems to have worked out in my portfolio. As for smokes: MO, RAI, PM, I say own ’em all, not sure if it should be in equal proportions though. I also like BTI, though it’s dividend patterns are less and different.

  12. Isn’t it ironic when pmi spun off from Altria that the experts picked pmi for out performance. In the last 3 years Altria has out performed despite a challenging environment. I own both because of spin offs, I do like this pick.

  13. Hi DM,

    Great buy – I own 120 shares of PM myself and have been adding latetely. This is one of the companies I want to hold for ever and grow my position whenever Mr. Market provides opportunities like these days. Curious what the upcoming earnings release will do to the stock price.

    I cannot imagine a world where people will quit smoking completely (I don’t smoke myself). In fact cigarettes together with alcohol have even played the role of ‘currencies’ during deep recessions and crisis in the past.

    Greetings from sunny (but still winterly) Europe,

    D

  14. I just initiated PM 15 shares last week at 82.93…who thought it would drop another 5%!! Haha, oh well still happy with the purchase. Moving on to Target next if it hopefully gets a little lower next week.

  15. Just a personal opinion here but I think marijuana and tobacco should not be held in such close context. KO has been around through prohibition and everything. I think a similar comparison would be during prohibition days, “Don’t you see a threat to the soda industry as a whole as a result of alcohol legalization?” and we all know what KO did the next 60-70 years.

    Just my personal opinion though!

  16. I see your point. I have considered Phillip Morris myself, but didn’t buy eventually because smoking is declining worldwide for the past two decades. Colorado was the last nail in the coffin so to speak for me. But of course, this is just my 2 cents. I wonder what’s DM’s take on this.

  17. Chris,

    I can understand your apprehension regarding investing in tobacco.

    My attitude on it is this: I say live and let live. If adults want to use a legal product with full knowledge of the side effects then I say go for it. Doesn’t cause me any issues. I think you’re seeing this attitude with marijuana legislation now. If people want to use the product, may as well tax it and regulate it. I think that’s a smart move.

    However, I agree with you regarding the debt. That needs to be curbed, in my opinion. I understand management’s reasoning, and it’s a great financial maneuver. But I’d like to see them slow the debt down and focus on growth – which is what they appear to be doing.

    Cheers!

  18. Katz,

    Nice positions there. I’m also long MO and LO. I like them all for differing reasons. MO has the dominant brands, LO has menthol and Blu. PM is my international play. 🙂

    And I agree they shouldn’t be in equal proportions. I’ve got PM, then LO and then finally MO.

    Take care.

  19. The Invisible Hand,

    I don’t see the marijuana legislation as a major threat. U.S. policy regarding the drug certainly won’t affect PM as it has no U.S. sales.

    I see them as two totally different products. Furthermore, I’m excited about the changes for three reasons:

    1. It allows regulators to perhaps focus more on marijuana and less on tobacco.
    2. It’s a great investment opportunity. I’m currently waiting for a winner to shine through.
    3. There is potential for the major tobacco companies to get in on this while it’s still young.

    Best wishes!

  20. D,

    I’m curious about upcoming earnings as well. Overall, I don’t expect exciting numbers from PM in 2014, but I do expect exciting changes for the future. This is a really huge year for PM as far as rolling out new products and expanding their breadth and reach.

    And I agree that cigarettes are pretty recession-proof. They tend to see upticks during times of stress, and understandably so.

    Thanks for stopping by from Europe. I’d love to visit the continent some day!

    Best regards.

  21. Warrior,

    Chevron is indeed looking interesting. I’m also looking at UL, GE, TGT and GIS here. The pullback is offering a few attractive opportunities, in my opinion.

    Take care!

  22. Tim,

    Thanks for stopping by!

    I hear you. There’s nothing wrong with not investing in companies like PM. That’s what makes it a market. There’s plenty of other opportunities. 🙂

    Best regards.

  23. Dan,

    Yeah, I honestly didn’t see it dropping below $80 on seemingly no catalyst. It was a surprise, which is why I dug deep for capital to make another purchase this month. I just can’t see it going significantly lower from here, but you never know. Mr. Market gets very irritated from time to time!

    TGT is another one high on my watch list. It continues to drop, so I’m looking forward to averaging down a bit more.

    Cheers!

  24. Dividend Mom,

    Hopefully it goes lower so you can get your price. 🙂

    I think PM makes for a great purchase at today’s price, but even lower would definitely be better!

    Best wishes.

  25. D-S,

    Smoking is addictive, and so is PM’s stock (at least for me). 🙂

    By the way, what kind of cigars do you smoke? I’d be interested to know, if you don’t mind.

    Thanks for stopping by!

    Best regards.

  26. I am certain The Dividend Warrior conducts a more comprehensive quantitative and qualitative assessment, as Jason does, rather than just looking a price graphs. My response to the Dividend Warrior’s comment, therefore, is primarily for the benefit of those who read it, may not have the same level of investment experience, and think that a dip in a stock’s price means a “buying opportunity”.

    “Looking really attractive at these levels after the dip.” Really? Why? Sure, the stock price might be attractive relative to the previously higher price but why should this be a factor in your investment decision making process? If you rely primarily on charts in your decision making process, then you are stating that you would have been happy to pick up INTC or CSCO in Nov 2000 because prices had come down from previously higher levels. Have a look at their price graphs. The fundamentals still did not warrant the prices after the “dips” and here we are, 13 years later, prices have never recovered to Nov 2000 levels. If you think those two are anomalies, you are mistaken. The investment world is littered with countless more examples.

    I strongly encourage investors to read the reference material Jason has reflected under the “Getting Started” tab. Learn how to read financial statements. Learn how to analyze an industry. Learn how to analyze trends. Don’t just rely on price graphs!!

    Chuck in Ontario

  27. Monty,

    I understand where you’re coming from with that. Nothing wrong with avoiding this company, or others like it. I take a different stance on it, but that’s what makes it a market. 🙂

    CVX is indeed looking very interesting. It’s still a bit above my cost basis, but I’m very interested in adding.

    Take care!

  28. Pursuit,

    Yeah, I was quite surprised to see it break $80. I honestly didn’t see that occurring. So when it did I had to bounce on it. It’s even lower than where I bought it, so maybe it continues going down. I’m quite comfortable with my position size now, so I don’t expect to add even if it does go lower. However, it’s a great spot to initiate a position or add to an existing one!

    Best regards.

  29. I think these are good fundamental companies, but I refuse to invest my money in stocks that produce cigarettes. Just not something I feel I can promote.

  30. Chuck,

    Great comment there. I plan to write a post on this exact subject.

    Indeed, a price drop is not in itself indicative of a buying opportunity. If a stock was 20% overvalued and it dips 10%, then it’s still not a great time to buy. However, if after performing a full analysis on a stock you feel it’s attractively priced, then a pullback would just provide an even better opportunity.

    Best wishes!

  31. Hi DM,

    PM is very great!
    At the moment I have only MO in my portfolio.
    But I want also to buy PM.

    I think smoking is addictive!
    And that’s good for this business.
    I think (and hope) MO and PM will make a lot of money in the next years and decades! 🙂

    I smoke “only” cigars – and even that makes almost addicted.

    best regards
    D-S

  32. I have known to many people to battle with smoking addiction and death from COPD and cancer, so I personally don’t care to be an owner in PM. I do have to admit it is a great investment though. I bought a good bit of CVX at 119, so I’m feeling the pain. I cashed in most of my emergency fun to buy more CVX yesterday. That made my wife happy happy!!!

  33. Besides historical data and dividend payments, I don’t like companies were the “Total Shareholders’ Equity” is getting more and more negative. I usually look for companies with positive and growing TSE.

    Best wishes

  34. PM is in top 5 of my positions and I didn’t intend to add more, but now when PM is so cheap , I’m very tempted to add more…maybe next week I’ll buy PM

  35. Nice grab!

    Philip Morris is a long term hold in my book, I think part of reason the price is low right now might be related to currencies. Exchange rates are likely a factor here, it seems to be hurting revenue. I already own a large PM holding, but maybe, just maybe, I can stuff a few extra shares into my portfolio at these prices.

    Anyways this company sells quality products that many people enjoy on a regular basis. A lot of opportunity for growth, plus overall they don’t have to deal with as many draconian tobacco laws as compared the US. When I was stationed in Korea I was buying Marlboros for only $2.50 a pack. It was only about $1.50 in the Middle East. Most countries have sane tobacco laws, while the US has idiots like Bloomberg. On the other hand, Australia is about as bad as it gets! Mixed bag, but overall saner ex-US.

    I enjoy PM products when abroad! Smoke ’em if you got ’em!

  36. years ago I had a friend of mine who retired after 30 plus years. After he retired he came and saw everyday at work and tried to talk to us to point we had to ask him to leave. Now im getting ready to retire and wonder what Ill do all day.Im 60 and got my first job at 11 years old (washing dishes) My job is 9 mounths a year so I have 3 months off I go nuts for the 90 days. I never was very balanced. It looks like you got that under control. Accolades to you.

  37. Hi DM,

    I smoke a lot of cigars from different countries.
    Many come from the Dominican Republic.

    For example Dominican Republic:
    Culture Dominican -> http://bit.ly/1dhZ8tR
    or Don Diego is very good: http://bit.ly/1i5KSsC
    One of the best (but very expensive) are the Griffins -> http://bit.ly/1fldP1P

    Nicaragua:
    I love Brick House cigars from Nicaragua -> http://bit.ly/1ikagvD
    Brick House are my favorites!

    Honduras:
    And a very good and very cheap stuff is Villa Zamorano from Honduras -> http://bit.ly/MLmYsF

    Cuba is very expensive. I tried some cigars, but until now I never have bought a complete package…
    Next year, if I have more money 😉

    Best regards
    D-S

  38. I bought shares of MO yesterday. Its yield is slightly higher than PM’s, though PM’s growth rate is better. (I’m a bit older than you, so I like higher yields :-))

    Also, currently, Zacks has a rank of 4-Sell on PM versus a rank of 3-Hold on MO. Not that I look at the ranks too seriously.. LO and RAI each has a rank of 2-Buy.

    Anyway, I think PM is a good buy at this price… good luck!

  39. D-S,

    Very cool! Interesting choices there. Many years ago (around college) I tried a few cigars. I mostly smoked a Nicaraguan brand called Padron. They make a cigar called 1964 Anniversario. It was very good. However, I haven’t had a cigar in many years now. It was an expensive hobby, but I do remember the camaraderie with cigar smokers being really amazing.

    Best wishes.

  40. Trader,

    I hear you. I typically don’t like trends like that either. You see the book value and shareholder equity issues because PM is loading up debt to retire shares, which they can do because they generate such prodigal cash flow. In addition, there isn’t much infrastructure necessary to manufacture cigarettes. I look at PM as a cash machine, but it’s certainly a bit riskier than many of my other holdings.

    Cheers!

  41. gibor,

    If you’re interested in Philip Morris I think now is a fantastic price. The price hasn’t been this low in two years, but since then earnings and dividends are way up. In addition, they’ve got growth potential on the horizon with the next-gen products. 2014 and 2015 looks very exciting for this company.

    Best wishes.

  42. CI,

    Glad to see you as an enthusiastic and supportive shareholder! 🙂

    Management has cited currency issues as a headwind right now, but that can easily turn into a tailwind down the road. These things tend to smooth out over the long haul. I’m not real concerned about it.

    Great to hear of prices as they are around the world. And I agree that Australia is particularly brutal. The plain packaging, in my opinion, is a potential problem if it spreads further. I know there is a lot of litigation going on regarding that, but that is a brand killer. It’s definitely something to watch.

    And I hear you about already having a large position. I honestly didn’t want to add, but below $80 for me was too good to pass up.

    Thanks for stopping by!

    Best regards.

  43. FerdiS,

    I’m surprised it’s rated as a sell by anyone. I think this is a long-term winner. The old Philip Morris was the best performing stock on the market over the last 50 or so years. Perennially undervalued with a high yield. Gotta love it.

    I like LO as well because of Blu and increasing market share, but the menthol is a concern.

    Take care!

  44. Anonymous,

    Thanks for stopping by and offering that perspective.

    I think a lot of it has to do with how you identify yourself. For me, I’ve never identified myself as a service advisor. I work at a car dealership for money alone. I exchange my limited life force for cash, but only because I have to. As soon as I no longer need that source of revenue then I’ll reclaim my limited time here on Earth back for myself. There are just so many things I want to do, and for me working 50+ hours per week just gets in the way of it. That will change one day though. 🙂

    Best of luck finding a little more balance. I’m sure there is something outside of your work that you really enjoy. Focus on that.

    Best wishes.

  45. Hi Jason,
    I have the same “problem” as you. A high proportion of PM in my portfolio plus a high proportion of tobacco companies in generally. But I couldn’t resist to buy more PM last week. Like other DGI’s I think it’s a great opportunity. I decided to buy more PM as I stayed in Thailand last year. Sawing 90 % of the people smoking Marlboro or L&M. 9.000 km away from Thailand in Germany many people smoke Marlboro. I think Marlboro is such a strong brand like Coca-Cola and should be in every portfolio of a DGI.
    Jason, there is one thing I would like to add: I admire you. Where do you take all the time having a 50 hour per week job to answer all those questions on your blog, write those wonderful articles, doing company research and reading other blogs? Really amazing.
    Great work. Keep on going.
    P.S. On Friday I couldn’t resist to buy some MAT.

    Best regards
    ZaVodou

  46. ZaVodou,

    Thanks so much for the warm comment there. I appreciate that. Support like that is what makes this all worth it.

    I honestly don’t know where I find the time, either. I really enjoy the writing, research, communication and everything else that goes into this, so that definitely helps. It’s really just the full-time job that gets in the way. 🙂

    I hear you on PM. It has a wonderful brand in Marlboro, and the market share worldwide is phenomenal. Plus China is a huge wildcard. I’m excited to see how the next-gen stuff plays out.

    Thanks for stopping by! Always appreciate your perspective.

    Cheers!

  47. Interesting comment by Charles. Maybe the pendulum will swing in PMI’s favor later?

    Of course I own both, although I am in the same boat as you DM that PMI is one of my largest stock holdings. I try to avoid putting more than 4- 5% of my total portfolio size in a single stock, no matter how much I like its prospects.

    Great overview btw!

    Best Regards,

    Dividend Growth Investor

  48. DGI,

    I’m with you. Going forward, I don’t want any one stock to be more than 4% of my portfolio. I’m hoping that over time my portfolio will grow in around PM and reduce its weighting. It’s a bit large right now, but I just couldn’t help myself. 🙂

    Thanks for stopping by! Glad you enjoyed the post.

    Take care!

  49. Glad I read this the other day, as I picked up PM today at a nice price on today’s dip.

    Love this blog, I check this out weekly.

  50. Matt,

    You got a great price! Nice job there. Patience is key. I didn’t see this massive drop coming, but it’s good for those with fresh capital. I’ve got my commission check from the day job coming in later this week so I’m anxious to go shopping!

    I appreciate your support. Your readership means a lot to me. Without readers like you encouraging me and stopping by this blog wouldn’t exist. So I do appreciate it!

    Best wishes.

  51. I”m surprised no one has mentioned PG which is close to their 52 week low. I just picked some up
    -Jersey Jerry

  52. Jerry,

    I’ll have to take another look at PG. Last I looked at the stock, it was well over a 20 P/E ratio. It looks like it’s squarely at 20 right now – which is probably pretty close to fair value. And there is nothing wrong with paying a fair price for a piece of a great business like this. I’m also long PG, so I think you made a great purchase there. I hope to increase my position with Procter & Gamble sooner rather than later.

    Cheers!

  53. I also have UL on my watch list and may buy some of that shortly. I know you mentioned this before, you use Morningstar and what other website to get an opinion on other analysts??? I’m looking for sites to get opinions/ratings/rankings on stocks (besides this blog and comment section of course) to just get a better idea of what the general consensus feels at that moment. Thanks Man
    -Jersey Jerry

  54. Jerry,

    I also use S&P Capital IQ, which is available for free through my brokerage (Scottrade). I know you can also pay for their services, but I’d check to see what free services you have access to.

    I hope this helps! 🙂

    Best wishes.

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