Promising Stocks in the Bargain Bin: Altria Group 

Of all the insights I've heard over these past few crazy months, the most telling came from an investor who appeared on CNBC last fall, advising in all seriousness: "There're only two positions to be in right now: cash, and fetal."

Sure, it's bad out there. Many companies that overleveraged their balance sheets -- AIG (NYSE:AIG), most notoriously -- are permanently impaired and will likely never rebound. We had an unprecedented boom; now we're in the middle of an unprecedented bust.

Nevertheless, history tells us time and time again that market panics and forced selloffs indiscriminately throw the good out with the bad. The frenzy over financial markets and the "sell-now-ask-questions-later" mood of global investors are creating opportunities for bargain-hunting investors -- the kind of deals we haven't seen in decades.

Using the wisdom of our 130,000-member-strong CAPS community, I've come across what could be one of those bargain opportunities: Altria Group (NYSE:MO).  

Data from Motley Fool CAPS and Capital IQ, a division of Standard & Poor's. TTM = trailing 12 months.
*From 3/31/08, immediately after Philip Morris Int'l spinoff.

Few companies have been vilified as much as tobacco king Altria -- probably for good reason. But despite that abhorrence, ironically enough, the company has produced one of the greatest returns on investors' capital over the past half-century.

Moral hesitations, fear of public outrage, and constant clamoring over lawsuits has kept Altria's share price consistently low, which juices the effects of this cash cow's primary tool -- a fat dividend. Investors who reinvested dividends found Altria to be the single best stock to own over a 50-year period. Hate all you want; the numbers speak for themselves.

Big Mo's pullback over the past year is no different. With shares currently yielding 7.4%, you're looking at a dividend that hasn't been cut in decades (aside from reductions to account for spinoffs of subsidiaries like Philip Morris International (NYSE:PM)), providing returns no one could sneeze at in this market.

CAPS member apoorinvestor shares a similar view, recently writing:

Beaten down with low P/E and high dividend. Slowing cigarette sales will be offset by price increases and UST acquisition. Nearly a 30% stake in one of the world's largest alcoholic beverage makers - SABMiller, which could pay off nicely.

One of the main concerns hovering over Altria these days is the burden of a tax increase that takes effect on April 1. Increased taxes, story goes, will cause business to flee. While true, that's probably not as harmful to business as some think. In fact, Altria recently raised prices by 14.5% more than the impending tax increase. Thanks to an extremely inelastic demand for tobacco products, Altria has significant power to raise prices without radically altering demand.

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