5-Star Stocks Poised to Pop: Philip Morris (PM)

5-Star Stocks Poised to Pop: Philip Morris

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, global tobacco giant Philip Morris International (NYSE: PM ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Philip Morris' business and see what CAPS investors are saying about the stock right now.

Philip Morris facts

Headquarters (Founded)	New York (1987)
Market Cap	$133.2 billion
Industry	Tobacco
Trailing-12-Month Revenue	$30.5 billion
Management	Chairman/CEO Louis Camilleri (since 2008) CFO Hermann Waldemer (since 2008)
Return on Capital (Average, Past 3 Years)	31.9%
Cash/Debt	$3.39 billion / $17.8 billion
Dividend Yield	4%
Competitors	British American Tobacco (AMEX: BTI )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 98% of the 2,749 CAPS members who have rated Philip Morris believe the stock will outperform the S&P 500 going forward. These bulls include DooDeeHead and DanFPilot.

Earlier this fall, DooDeeHead touched on the tailwinds working in Philip Morris' favor:

[T]he world population is growing faster and faster every day. You know what that means: MORE SMOKERS! Marlboro is the number one smoked brand in the world for a reason, and it is why I will stick to Phillip Morris for now.

Philip Morris even boasts a robust three-year average operating margin of 41%. That's higher than that of other tobacco stocks like British American (32%) and Reynolds American (NYSE: RAI ) (30%), as well as former parent Altria (NYSE: MO ) (38%).

CAPS member DanFPilot elaborates on the ultra-long-term bull case:

[Philip Morris] is a very profitable company and it has already shown to be good at growing its earnings. It pays an excellent dividend. ... Smoking may be taboo here in the U.S. but in the rest of the world, not so much. ... I don't see smoking ever going away, at least not in the forseeable future. I am currently 39 and I plan to keep this stock until the day I die and will leave it to my daughter. I'm willing to bet that I will collect a whole lot of dividends that will consistently be increased. This stock along with other dividend stocks I own will provide a much better retirement income for me than Social Security ever will.

What do you think about Philip Morris, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Want to see how well (or not so well) the stocks in this series are performing? Follow the new TrackPoisedTo CAPS account.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Philip Morris and Altria. Motley Fool newsletter services have recommended buying shares of Philip Morris. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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.

Report this Comment On December 21, 2011, at 10:47 AM, rajaramanand1981 wrote:

Its definitely a 5 star company and stock. One of my largest holdings..Keep rocking
Report this Comment On December 21, 2011, at 12:28 PM, sept2749 wrote:

I have done really well with PM -picked it up on the cheap a few years ago. Now I want to buy more but really have no idea of how much to pay. Can anyone help me out ? Should I pay today's price and just figure on averaging the costs? Still, I think 77.- is a bit high. So, if anyone has a good idea of what one should pay for PM let me know.
Report this Comment On December 21, 2011, at 4:11 PM, sheldonross wrote:

@Sept2749
PM has increased dramatically lately. I bought some at around $68 only a month and a half ago. The trouble is, it's hard to see it going back down a whole lot.
If your concerned about overpaying, you could always sell a put. A $70 put for Feb 12 is going for about $53 bucks, right now. Earn ~4.5% annualized for tying up $7000($6947 inc sell price) for two months, and possibly get into PM at a decent price point.
Report this Comment On December 24, 2011, at 8:30 AM, pepijndk wrote:

it's a great company and I'v owned it for a long time now. But i'm becoming less and less optimistic about future prospects.
Yes, the economics of the business are great. But PM faces structural challenges over the coming decades. Simply put: PM operates in 2 types of markets:
1. Western markets where ownership rights are strong but regulatory assault a growing concern. Plain packaging which will be introduced in Australia next year, is a WHO recommendation, with the EU, UK and Canada likely to follow, threatens to commoditize cigarettes. New smokers will be guided by price, not brand.
2. Other markets pose less risk of regulatory onslaught but have weak ownership rights and high levels of corruption. Contraband threatens to erode PM's position in most of these markets. Note that PM is pretty new to most of these markets. Increased sales quickly lead to increased copies, leading to loss of what could have been loyal customers. Especially PM's decision to open a plant in China was a bad idea as China manufactured contraband Marlboro - undistinguishable from the real thing - are now flooding Asia.
At now 18 times record earnings, it is doubtful whether this will remain a good investment going forward...

updated 2 days ago Sponsored by:
	DOW	12,454.83	-74.92	-0.60%
	S&P 500	1,317.82	-2.86	-0.22%
	NASD	2,837.53	-1.85	-0.07%

PM	$85.38		+0.04	+0.05%
Philip Morris Inte…		CAPS Rating:

RAI	$41.97		+0.08	+0.19%
Reynolds American,…		CAPS Rating:

MO	$32.11		-0.15	-0.46%
Altria Group, Inc.		CAPS Rating:

BTI	$95.46		-0.18	-0.19%
British American T…		CAPS Rating:

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5-Star Stocks Poised to Pop: Philip Morris

Comments from our Foolish Readers

Report this Comment On December 21, 2011, at 10:47 AM, rajaramanand1981 wrote:

Report this Comment On December 21, 2011, at 12:28 PM, sept2749 wrote:

Report this Comment On December 21, 2011, at 4:11 PM, sheldonross wrote:

Report this Comment On December 24, 2011, at 8:30 AM, pepijndk wrote:

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