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Is MO Stock a Solid Long Term Investment?


Finding the right type of stock to purchase as a long-term investment isn't always the easiest task in the world. However, you might have already discovered that it's a lot more difficult to go wrong when you choose something that people repeatedly come back to. Regardless of your personal feelings on the matter or which side of the political camp you fall on, stocks that involve things like tobacco and alcohol are typically the ones that perform exceptionally well, largely because people continue to purchase these products in droves. Even when the economy is bad, people still want to purchase products like these because they're looking for something that will give them a little bit of joy and perhaps allow them to forget about the state of things for a short time. Therefore, other stocks can start experiencing a downward trend when the economy goes sour, yet these particular types of stocks will sometimes actually go up. If you're thinking about adding a stock like this to your long-term investment portfolio, you might want to consider Altria, traded on the stock market as MO. By all accounts, they seem to have a lot going for them. However, you clearly won't be able to know whether or not they're right for you unless you spend a little bit of time investigating what they're all about.

The Company at First Glance

This particular company is without a doubt one of the largest producers of tobacco products in the entire world. Located in a rather rural area near Richmond, Virginia, the company does business on a global scale and employs more than 6,000 people. In 2020 they had a revenue of $26.15 billion. They are a subsidiary of an even larger company, the venerable (and infamous) Philip Morris. At the moment, their stock is selling for $55.53. Surprisingly, that number is actually down by 1.79%. Even when you consider the fact that the stock has lost just over a dollar of its worth per share, you have to ask yourself whether or not that's anything to be overly concerned about when you're talking about a company that does business all over the world and has so many loyal customers. The truth of the matter is that this company, which has been doing business since the mid-1980s, knows how to handle changes in their demographic, not to mention downturns in the economy. The fact that they're still the largest producer of tobacco anywhere in the world speaks volumes, especially when you consider the fact that their parent company, Philip Morris, was the subject of a number of court battles during the 2000’s as a direct result of accusations that they had targeted young people in their ads and withheld information regarding the danger of their products. After all of that, they're still going strong. Does that mean that you should invest in this company so that your portfolio can keep going strong as well?

A Potential Gold Mine?

Maybe you agree with smoking, maybe you don't. Regardless of where you stand, this is a stock that many analysts believe is too important to pass up. As a matter of fact, a number of them have recently pointed out that the company routinely provides lucrative rewards to its shareholders, allowing them to profit when the company profits. This is most frequently accomplished with extra capital in the form of dividends. At the moment, the stock may be selling for more than $55 per share, but a number of stock market analysts are quick to point out that it would be a mistake to avoid purchasing it now in hopes of it becoming cheaper in the future. As a matter of fact, most of them feel like you're getting a real bargain at this price and you should move on it while you still can. That's because a lot of stock market analysts believe that the stock will continue to go up, and by a great deal. If you are able to purchase several shares of the stock at today's prices, you might be able to benefit more than you ever even imagine.

Of course, most individuals think about the profit they could potentially make when they decide to sell stock once the price per share skyrockets. However, it's important to remember that this particular company usually provides additional dividends to their stockholders, meaning that you stand the chance to make significantly more money before you sell off your shares. That in turn could mean a massive payday for you, provided that you're willing to take the risk and purchase enough shares for it all to be worthwhile. If you're an investor that is just beginning to get your feet wet and you’re apprehensive about spending more than a few hundred dollars on a stock, you may not be able to purchase enough shares to make a significant difference in the amount of money that you spend versus the amount you could potentially make. On the other hand, if you're someone who's used to investing and you typically spend a few thousand dollars when you purchase shares, it could be a different story entirely.

A Quick Look at the Numbers

Currently, Wall Street is waiting on the company to report its third-quarter earnings, something that it is expected to do in the coming days. Oddly enough, they are anticipating that the company's third-quarter earnings for this year will only be about two cents higher than the same time last year. They also anticipate that the company's revenue will remain roughly unchanged from the previous year, which was $4.887 billion. If all of these numbers are remaining largely unchanged, where is the potential benefit to investors? It all comes down to a single thing. Up until recently, the company was mired in court yet again, this time because they had taken over the reins of an e-cigarette company called Juul. Once again, the company had been marketed as a healthier alternative to smoking. It wasn't long before they wound up being taken to court by the Federal Trade Commission in an antitrust lawsuit, something that has weighed heavily on the company and shed some serious doubt over the value of the company's stock for a number of months.

Recently, a judge dismissed all of these charges, essentially freeing the company of any responsibility whatsoever. That's good news for investors because it largely means that the company can now focus on the things that companies routinely focus on like selling their products and making money. It also means that it's highly unlikely that a number of investors are going to be selling off their shares of stock in the thousands. All of this means that the value of the stock is likely to go up over the next quarter and ultimately, over the course of the next year. For anyone who is considering purchasing the stock as part of their long-term investment portfolio, this is all good news. If you want to break things down even further, it basically means that you could potentially purchase the stock at today's prices and then make out like a bandit when you finally decide to sell. Of course, that's also contingent on the company not ending up in court in the near future, but even in the worst case scenario, it's not really likely that you would lose a great deal of money by purchasing shares. The reality of the situation is that so many people use these products that even if the stock were to plummet, you could simply hold on to your shares until it goes back up again and then sell for a profit.

A Money Making Machine

The fact of the matter is that a lot of people seriously consider Altria to be one of the most solid money making stocks out there. Much of that is because the company has been steadily paying dividends to its shareholders for more than 50 years. By the same token, the company typically provides payoffs which are far more than 20 times what it costs people to get involved when purchasing shares. That is a tremendous benefit in and of itself and it's something that people who invest in the stock market don't have an opportunity to enjoy very often. As a matter of fact, stock market analysts typically consider this particular company and Coca-Cola to be the only two companies in the United States that have this kind of potential value associated with them. Everyone else sort of ends up falling by the wayside because they simply can't keep up. Again, it's worth mentioning that one of the reasons that these companies do so well is because even when the economy is in a serious downturn, people keep buying these products. In many cases, they buy the products even more when things aren't going well. Think about it this way. If you're a smoker, you obviously enjoy smoking. What is the first thing that you do when you have a rough day? Virtually any smoker will tell you that when they get upset or frustrated, they want a cigarette. If things are going bad in the economy and everyone is stressed all the time, they want to smoke more. That means that you're actually making more money when you invest in shares concerning this particular company.

A Fool Proof Stock?

You might even say that a lot of stock market analysts consider this particular stock to be almost foolproof. Despite multiple economic downturns, some truly frightening truths about what smoking can do to a person's health, and several trips to the courtroom, this company always seems to come out on top. As a matter of fact, they don't just survive all of these challenges. They thrive in spite of them. If they’ve figured out how to do that, you have to ask yourself how much you could potentially benefit from purchasing shares of their stock. At the end of the day, the amount of money that you could potentially stand to make with this stock alone might be more than you could potentially make with the remainder of your portfolio. When you look at it as a long-term investment option, you have even more leeway because you don't have to purchase the shares and then make money off of them right away. You're in control. As such, you can hold on to the shares for anywhere from six months to a year or longer. If you really want to hold on to it for a while, you might even be able to keep the stock for anywhere from three to five years and then watch the market, only selling off your shares when you choose to do so. This puts you directly in the driver's seat and it gives you the potential to make some serious cash in the process.

These days, you can't be too careful when it comes to deciding which stock you want to purchase as a long-term investment. In fact, it's becoming more and more difficult to figure out with any level of accuracy which stocks will perform well and which ones will eventually fail. That being said, this is a stock that definitely has proven staying power. It also has a rich history of performing exceptionally well and passing those benefits on to the stockholders in a big way. If you're looking for something that can potentially earn you a great deal of money in the long term, this very well might be a stock for you. If you have the means to pull together enough money to purchase several shares, it would seem almost foolish to pass up the opportunity.

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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