Prospecting for Stocks (MO)

Prospecting for Stocks

By Motley Fool Staff | More Articles
August 27, 2009 | Comments (0)

Building a successful stock portfolio starts with finding great businesses. And finding great businesses requires digging through financial statements, news, and other information sources to find companies with leading growth rates, strong margins, and healthy financials.

In our Prospecting Stocks screen, we evaluate proprietary community intelligence from the 140,000-plus investors participating in Motley Fool CAPS as well as four key, hand-picked fundamental criteria.

Our goal is to accelerate your research, and find the stocks that are worth a closer look. So get out your shovel and pick axe as we start digging for gold! Let's dig into the Tobacco sector with our screen, starting with Altria, a company that has returned 25.4% this year. Is now a good time to consider Altria or should you look elsewhere?

Altria vs. Industry Peers

Stock	Altria (NYSE: MO )		Philip Morris International (NYSE: PM )		Lorillard (NYSE: LO )		Reynolds American (NYSE: RAI )
CAPS Community Rating We prefer 4-star or 5-star stocks.	****	YES	*****	YES	***	no	****	YES
CAPS 1000 We like stocks rated "outperform" by 80% of top CAPS members.	98.3% Outperform	YES	94.6% Outperform	YES	88.9% Outperform	YES	84.4% Outperform	YES
Five-Year Revenue Growth We like to see five-year revenue growth of at least 10%.	-20.5%	no	N/M	no	N/M	no	8.2%	no
Gross Margin (TTM) We like to see gross margins of 35% or higher.	54.8%	YES	80.6%	YES	41.7%	YES	48.1%	YES
Total Debt-to-Equity A total debt-to-equity ratio of 0.50 or less gets a check.	4.92	no	2.21	no	1.14	no	0.72	no
Return on Equity We look for a minimum of 14% return on equity.	110%	YES	99.6%	YES	146%	YES	13.8%	no
Total Score		4 of 6		4 of 6		3 of 6		3 of 6

Stock

Altria (NYSE: MO )

Philip Morris International (NYSE: PM )

Lorillard (NYSE: LO )

Reynolds American (NYSE: RAI )

CAPS Community Rating

We prefer 4-star or 5-star stocks.

****

YES

*****

YES

***

****

YES

CAPS 1000

We like stocks rated "outperform" by 80% of top CAPS members.

98.3% Outperform

YES

94.6% Outperform

YES

88.9% Outperform

YES

84.4%

Outperform

YES

Five-Year Revenue Growth

We like to see five-year revenue growth of at least 10%.

-20.5%

N/M

8.2%

Gross Margin (TTM)

We like to see gross margins of 35% or higher.

54.8%

YES

80.6%

YES

41.7%

YES

48.1%

YES

Total Debt-to-Equity

A total debt-to-equity ratio of 0.50 or less gets a check.

4.92

2.21

1.14

0.72

Return on Equity

We look for a minimum of 14% return on equity.

110%

YES

99.6%

YES

146%

YES

13.8%

Total Score

4 of 6

3 of 6

N/M = not meaningful.

Altria appears not to be as good an opportunity as Philip Morris International.

What do you think about Altria? If you'd like to make your own call on Altria, or post a pitch about why you think it will outperform or underperform the market, click here. Of course, you can also just visit to see what other members are saying about it now or what they are saying about more than 5,300 other stocks by joining us on CAPS.

Our "Prospecting Stock"s screen is a simplified version of the special checklist that has helped Jeff Fischer and the Pro community to find the next opportunities for the Motley Fool Pro portfolio. Learn more about Motley Fool Pro.

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Enter your email address below to find out what made Jobs so enraged!

Disclosure is important to us here at The Motley Fool. The stocks mentioned in this article received their CAPS ratings from participants in the Motley Fool's CAPS service. No individual person selected the stocks in this article, so there is no author to disclose an interest in them. Since this article was automatically generated by identifying the stocks rated by the CAPS community and by buyers in today's market, it is possible that Motley Fool personnel (and even The Motley Fool itself, through our Million Dollar Portfolio, Motley Fool Pro, and Ready Made Millionaire services) have positions in these stocks. Our lawyers make us put all this at the bottom of this article. You can learn more about The Motley Fool's disclosure policy.

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 icon found on every comment.