Philip Morris Best Variant for Investments

Published on December 15th, 2014 00:00

The ban on smoking in public places in New York explains why the stock of the leading cigarette maker, Philip Morris International has fallen dramatically in the latest weeks. Even though Philip Morris really does a wonderful task of marketing its products, being a great choice to put in ones portfolio for great market performance, and a strong 4% dividend profit.

Certain there are troubles, just like the extending worldwide ban on tobacco use in public places, most not long ago in Russia, and the increasing popularity of electronic. World-wide cigarette sales, by volume, keep on to drop due to these tendencies. All above makes a good time to acquire Philip Morris. Furthermore, this is a company with some of the most solid cigarette brands across the world. It will keep on to report profits boost of about 6%-8%, since it can use that power to increase prices.

Philip Morris owns the best selling cigarettes as Marlboro, L&M and Chesterfield, among others. Altria held the U.S. legal rights to those brands when the two manufacturers divided in 2008. After all, buyers find major problems, or they wouldn’t have pulled this stock down by 9% during the past six weeks. But the fears seem irrelevant.

Philip Morris has cautioned that larger prices will hurt margins in the second quarter of 2014, a tough time anyway since former final results were so solid they are quite difficult to overcome. Apart from that, prices are increasing for the correct reasons. Philip Morris is making investments in diverse alternative tobacco products, so this should be a major source of earnings within three to four years.

Sales tendencies are poor in major markets as Japan, the Philippines, Indonesia and Australia. On the other hand, Philip Morris published significant boost in Latin America, Canada, Europe, Eastern Europe, the Middle East, and Africa. The major part of profits originated from price raises, thanks to that brand clout. Q2 cigarette sales dropped 2.7% by volume, however the company obtained an extra $494 million, from price boosts. In spite of the price boosts, Marlboro acquired share in the majority of markets.

By Robert Smith, Staff Writer
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