One of my top holdings is Altria (MO) . I am going to buy 100 shares this afternoon and reiterate how much I like this story for the long term.
Some worry that higher excise taxes next year will lead to weaker volume trends, to the tune of 5% declines. But what is key to remember is that Altria has been able to get pricing from its premium brand, and this will continue. Just in its past quarter, the company posted 5% price increases and double-digit earnings growth, and volumes weren't nearly as terrible as investors feared -- down around 3%. This company is flush with cash and will continue to deliver shareholder value by increasing its dividend and buying back its stock. The company has enormous cost controls, and this will drive earnings going forward. The only knock on the company is that it should do a deal to broaden its product portfolio. I believe UST (UST) makes perfect sense, and Altria has plenty of cash to do it. After my purchase, I will own 9,200 shares of Altria, or 5.98% of the fund.
I will also continue to pare back by stake in Schering- Plough, selling another 500 shares. I'll take my 6% gain and use the cash to buy the newer names in the fund -- Proctor & Gamble (PG) in the high $60s, Pepsi (PEP) at $67, Nike (NKE) at $59, General Mills (GIS) around $66 and Wellpoint (WLP) in the low $50s. I am also considering adding another biotech name -- Celgene (CELG) -- if it gets below $70.
After my sale, I will own 1,000 shares of SGP, or 0.61% of the fund.
Regards,
Jim Cramer
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DISCLOSURE: At the time of publication, Cramer was long MO, SGP, PEP, PG, GIS and WLP.
Send email to james.cramer@thestreet.com.