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Lancelot Tucker
Lancelot Tucker
Articles (104) 

Can Altria become a Top Mover and Shaker in the E-Cigarettes Business?

November 09, 2014 | About:

Over the years, many tobacco and e-cigarette companies have made impacts on the industry. However, one company that stands out of the pact is known as Altria Group Inc. What makes Altria so special? Altria has a reputation for being one of the most dependent dividend stocks that makes its investors happy by giving them reasonable high payouts and is a very promising company in regards to growth as well. A highly rated company that flows with consistent payouts of increasing dividends, this company carries a yield of 4.5%.

3 reasons why investors must take a second look at Altria Group Inc.

  1. Altria pricing: Altria is a large enough company that has the power to offset pricing if there should be a decline in the quantity of users. Since proper pricing is a part of developing a good marketing strategy, Altria takes great pride in keeping its customers happy by pricing products in a reasonable manner.

In the middle of 2014, Altria’s Marlboros market shares were 44%, which makes the company become a major player in the cigarette industry. Altria used its influence that it has gathered in the past to hike up prices on the Marlboro brand in an effort to compete effectively against other brands. The strategy worked and Altria succeeded in keeping its customers still buying the Marlboro brand even though they were increasing price on the product at a steady pace.

2. Selling electronic cigarettes and vapor products: Since Altria is in the business of making much profit; it started looking at other profitable avenues in the cigarette industry to pursue. Tobacco was on the decline, many tobacco smokers were already switching to e-cigarettes because of high price caused by constant changing regulations, and the bad effects tobacco can have on one’s health. Therefore, Altria went looking into the e-cigarette and vapor markets for answers and eventually started selling some of the best e-cigarette products in the market.

As Altria investigated the profitability of the e-cigarette and vapor markets and found them to be very lucrative industries, Altria introduced its MarkTen brand e-cigarette product in the attempt to swing money over to them. This move worked very well and the public is pleased with the new MarkTen product. Since the introduction of MarkTen, Altria has contracted many retailers to help sell the product.

Since getting consumers to accept MarkTen, Altria ventured further by introducing a new e-cig product known as Green Smoke. The introductions of MarkTen and Green Smoke gave Altria a strong foothold in the e-cigarette market and soon profits started booming and the promise of bigger growth loom stronger in the eyes of the company’s executives and investors.

3. Business opportunities elsewhere: As investors worry about the regulations clampdown that cigarette authorities might put on the e-cig industry, thus threatening and limiting the continued growth of Altria, the company began displaying their other side to the public, namely their wine and beer businesses.

Altria’s wine business includes Ste. Michele Wine Estate that makes well tasting wines such as Columbia Crest and Chateau Ste. Michele. In the past, the Ste. Michele Wine Estate would produce Altria’s revenue amounting to 2.5%. However, as time goes by, revenue increased to as much as 50% over a four years span.

Another of Atria’s holdings is into the beer market. The company owns some 27% ownership in SABMiller. SABMiller is producer of exquisite beer brands such as Foster and Miller and Altria’s stake in SABMiller gave the company a strong profit margin to look forward to each year.

SABMiller is a strong earner in the beer industry and as a result made $1 billion in profit during last year run. In addition, experts in the beer business agree that there is no letting up with SAB Miller and that as long as the company stays on the path it is now travelling it will continue to make huge profits at a steady growth. With SABMiller making huge profits, Altria’s financial capacity is expected to skyrocket.

In times of doubt from investors as to whether Altria’s strong profiteering in the tobacco and e-cig markets will cease based on tobacco regulations and other factors affecting the tobacco and e-cig markets, the company has only to assure the worried public of their successes in the wine and beer industries. Such display of the type of profits that the company is making will help to sure up many investors attitude towards Altria.

Growth potential of Altria

As the company continues to show favorable increase, some speculators are wondering if Altria will continue on its awesome path of success. Altria continues to show impressive potential in 2014 going into 2015. As 2015 approaches, the company is expected to move its earnings per share upward reaching a high of 7.8% in keeping with demand and supply.

Are investors doubtful that Altria will not meet its 7.8% earnings per share in 2015? Even if some investors are doubtful of Altria’s potentially upward thrust to reach 7.8% EPS, one can look at the potentially large success rate that the tobacco market has shown over the years. Since Altria is a leading contender in the tobacco industry, one can only conclude that the company stands a good chance of reaching their financial target. So far, Altria’s expected yield dividend is in the 4.5% range and this still appeals somewhat to investors on the hunt who are looking to make more money on their investment.

Altria’s profit sharing to shareholders stood at $2.16 per share over a one-year period. Trading took place at $47 per share, which made it to hit a 52-week high without falling during that time.

As Reynolds American Inc. and Lorillard Inc., combine forces to try to outdo Altria’s progress in the cigarette industry by trying to lower the 40% market foothold that the company has already gained, speculations are running high from investors and key players in the tobacco and e-cig business. Altria’s earnings guideline for the remainder of 2014 is expected to be about $2.54 to $2.59 coming from $2.38 since 2013. This expected increase took place during 2013 and into 2014 would show an increase amount of 6% to 9%.

Altria is moving forward and producing strong confidence in the hearts of financially hungry investors. With the stock market fluctuating and at times showing unsatisfactory results, investors are more inclined to buy Altria’s stock. Most investors remain bullish when it comes to Altria stock and past performances by the company speaks for itself. As experts still predict growth of this company in the future, some investors on the stock exchange are realizing that Altria’s stock is one of the truly and reliable safe havens for investors who are trying to make a killing by buying and selling stocks.

About the author:

Lancelot Tucker
Lancelot Tucker is a freelance writer living in Jamaica. He often writes about finances and other business based articles.

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