Philip Morris International: A breakout buy?
The stock of this global cigarette maker looks bullish from a fundamental and technical standpoint.
Philip Morris International (PM) sells cigarettes such as Marlboro and Virginia Slims in 180 countries, generating annual revenues of $75.3 billion.
The stock was floated back in early 2008 -- as a spin-off from Altria Group (MO) -- and traded near 50 at that time. Since hitting its bear market low around 33 in 2009, the stock has been driving higher strongly.
The stock's 12-month performance shows the issue appreciating 29% versus a 1% gain for the S&P 500 index.
Its momentum indicator is strongly bullish. And the accumulation-distribution line compliments the price action of the stock. That indicates good buying supporting the breakout.
The stock has just moved across key resistance at 73. The move comes with a widening of the spread (daily range from high to low). That is bullish, showing ease of price movement.
PM spent several weeks near the top of base. That was very bullish too. Now the stock has broken out from an 18-week, cup-and-handle base. The move carried the stock to a new all-time high.
Net for the upcoming fourth quarter should climb 11% to $1.08 a share from 97 cents a year ago. The highest estimate on the Street is at $1.10 a share.
PM has surprised big the prior two quarters, topping the consensus estimate by 14 cents a share and 13 cents. That works out to beating the consensus by 11%. So chances are it could do it again.
Going out to the first quarter of 2012, the Street expects an 11% gain in net to $1.18 a share from $1.06 a year ago.
Insider activity is also bullish. Insiders have been buyers of the stock over the past several months. They have done very little selling.
We rate PM a good intermediate-term play. It has a beta of 0.87 versus 1.00 for the stock market, which means it is less volatile than the overall market.
The stock yields over 4%. So in addition to its technical breakout, the stock is attractive to those looking a good return.
- Philip Morris: Safety-first income play
- Safety in consumer staples
- Philip Morris: Smokin' good quarter
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