Altria (MO) is one of my biggest holdings in the fund, and I am going to add another 100 shares after this Alert reaches all of you. The stock is up about 6% from when it reported earnings (in my opinion, the stock sold off too much after it reported earnings), and I believe it can go a lot higher.
The quarter was solid, as the company posted a 1-cent positive surprise on better expense management and in-line revenues. Despite the beat, the company reaffirmed earnings for the year (growth of 9% to 11%). Investors took that to mean that the company lowered the back half of the year. Also, management expects volumes to fall at between 3% and 3.5%, which also made investors nervous. Most investors expected this decline rate and the key is that the company is able to get pricing.
Management is notoriously conservative, and this quarter was no different. The bar is now very low, and the stock is trading at a discount to the group despite its leadership position in the industry. The company is flush with cash and will very likely increase its dividend next month, which could mean a yield over 6%! Over time, I believe investors looking for a good dividend story and an industry leader will find it in MO.
After my trade, I will own 9,100 shares of Altria, or 6.01%.
Regards,
Jim Cramer
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DISCLOSURE: At the time of publication, Cramer was long MO.
Send email to james.cramer@thestreet.com.