Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



How Altria Group, Alcoa, and Lorillard Set New Highs Last Week

The S&P 500 (SNPINDEX: ^GSPC  ) fell back from its record levels last week, losing 18 points or just less than 1%. Fears about potential trouble in Europe outweighed gains related to the Federal Reserve's decision to end its quantitative easing program later this year, but with stocks still so close to record levels, dozens of stocks still hit new yearly highs. Let's take a look at why Altria Group (NYSE: MO  ) , Alcoa (NYSE: AA  ) , and Lorillard (NYSE: LO.DL  ) were among them.

Source: Lorillard.

Lorillard hit an all-time high, gaining 2.5% on the week after the tobacco giant confirmed that it and fellow cigarette-maker Reynolds American are in talks to merge. The combination of Lorillard and Reynolds would change the tobacco industry dramatically, with benefits for both companies. Currently, Lorillard has a much heavier exposure to menthol cigarettes than its two main rivals in the industry, and that leaves it potentially vulnerable to adverse rulings about menthol products specifically. On the other hand, Lorillard has been a first-mover in the electronic-cigarette industry, and if that trend continues to pick up steam, then a combined Lorillard and Reynolds could eventually gain a big lead in the U.S. e-cigarette market. Antitrust considerations would make a merger tricky, but if it can go through, it could be quite positive for both companies.

In that light, you'd think that Lorillard's news would be bad for Altria. Yet the tobacco giant rose 2.5% to hit its best level since splitting off its international business. Part of Altria's appeal comes from the fact that the company has been good about returning capital to shareholders through dividends and is reportedly considering a much larger share-buyback program as well. In addition, Altria has a substantial interest in beer-maker SABMiller, and that gives the company diversification that most of its peers lack. In the end, consolidation in the cigarette industry could help Altria, removing a potential source of pricing pressure and making the industry much closer to an oligopoly.

Source: Alcoa.

Alcoa soared almost 7%, marking a new three-year high as the aluminum company reported strong earnings for the second quarter. Alcoa's strategy toward emphasizing its higher-margin value-added products has been extremely successful, with recent acquisitions geared toward accelerating that process and making the company even more profitable. Yet Alcoa has also seen some success even in its lower-margin primary metals business, as pullbacks in production volumes are finally starting to have the desired impact of putting a floor under prices in the metals markets. Alcoa still has a way to go, but in time, the company could restore investor confidence in the aluminum business once and for all.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3026718, ~/Articles/ArticleHandler.aspx, 9/5/2015 12:10:19 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

Today's Market

updated 2 hours ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 4:30 PM
^GSPC $1921.22 Down -29.91 -1.53%
S&P 500 INDEX CAPS Rating: No stars
AA $9.49 Down -0.08 -0.84%
Alcoa, Inc. CAPS Rating: ****
LO.DL $0.00 Down +0.00 +0.00%
Lorillard, Inc. CAPS Rating: ****
MO $52.38 Down -1.21 -2.26%
Altria Group, Inc. CAPS Rating: ****