2012 is nearing its end, and now's a good opportunity to look at what happened throughout the year to the stocks you follow. If you know the important things that a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.
Today, I'll look at Philip Morris International (PM +1.04%). Well-known as a spinoff from former parent Altria (MO 1.11%), Philip Morris represents the international side of what used to be a global tobacco business. With its focus outside the U.S., Philip Morris has avoided many of the controversies involving domestic tobacco companies, but it faces its own challenges. Below, you'll find more on what moved shares of Philip Morris this year.
Stats on Philip Morris
|
Year-to-date stock return |
15.9% |
|
Market cap |
$148 billion |
|
1-year revenue growth |
2.3% |
|
1-year net income growth |
1.6% |
|
Dividend yield |
3.8% |
|
CAPS rating (out of 5) |
***** |
Source: S&P Capital IQ.
What's Philip Morris been up to this year?
Ever since its spinoff, Philip Morris has been a natural pick for investors wanting to avoid the battle in the U.S. against tobacco. This year, the benefits of that strategy became more obvious than ever, as U.S. tobacco companies faced an onslaught from all fronts. Although Reynolds American (RAI +0.00%) and Lorillard (LO +0.00%) managed to get an FDA ruling overturned in court that would have forced it to display graphic warning labels, the industry has had to deal with an ad campaign from the Centers for Disease Control as well as increased taxation and regulation at the local level, with New York City among municipalities limiting smoking with its outdoor ban. Altria and Reynolds have had to answer with layoffs to keep margins up.
Even though it doesn't have to deal with U.S. regulators, Philip Morris hasn't been immune from regulatory pressure, as foreign governments start following some of the same tactics that have hurt U.S. tobacco companies. Earlier this year, Australia's highest court upheld a decision that will force Philip Morris, British American Tobacco (BTI +0.96%), and other tobacco companies to remove all brand logos from cigarette packs, leaving only bland packages with warnings that include graphic images. That hits Philip Morris especially hard, as its Marlboro brand is well known around the world.
Perhaps the most interesting thing affecting Philip Morris is the recent rush toward looking at tobacco as a possible source for a flu vaccine. With a huge potential customer base in China, Philip Morris hopes to use vaccine research as a way to break into the emerging market, as state-owned China National Tobacco has a near-monopoly there.
Philip Morris has held up quite well in 2012, with its lucrative dividend helping keep investors happy. The stock faces constant threats, but so far, the company has navigated dangerous minefields quite well.
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