PM Stock Rallies 30% in 6 Months: What Should Investors Do Next?

Summary

• Turning Point Brands (TPB) has shown exceptional price appreciation, gaining 45.94% since the Trend Seeker buy signal on 9/19, with 100% technical buy signals.

• The company operates through three segments: Zig-Zag Products, Stoker's Products, and Creative Distribution Solutions, offering a diverse range of tobacco and non-tobacco products.

• Fundamental factors include a market cap of $1.10 billion, P/E of 20.76, and expected revenue and earnings growth over the next two years.

• Analysts are bullish with 3 strong buy and 1 buy ratings, but caution is advised due to the stock's volatility and speculative nature.

The Chart of the Day belongs to the tobacco products company Turning Point Brands . I found the stock by using Barchart's powerful screening functions to find stocks with the highest technical buy signals, highest Weighted Alpha, superior current momentum and having a Trend Seeker buy signal then used the Flipchart feature to review the charts for consistent price appreciation. Since the Trend Seeker signaled a buy on 9/19 the stock gained 45.94%.

TPB Price vs Daily Moving Averages:

As President-elect Donald Trump prepares to return to the White House, renowned economist Mohamed El-Erian is cautioning against media oversimplification of the incoming administration’s proposed tariff strategies.

What Happened: In a recent statement on X, El-Erian highlighted the intricate nature of Trump’s tariff discussions, noting that the proposed economic policies encompass at least three complex economic stages influenced by multiple factors, including trade flows, corporate pricing strategies, and geopolitical considerations.

El-Erian’s core message remains clear: Trump’s tariff debate requires sophisticated, nuanced analysis that transcends simplistic narratives. “The issue is quite complex,” he emphasized, underscoring the need for comprehensive economic understanding beyond headline rhetoric.

Trump’s proposed economic blueprint, which includes a universal tariff of up to 20% on imports and potentially up to 60% on Chinese goods, has sparked intense economic debate. Tech investor Peter Thiel suggests these tariffs could significantly impact Chinese companies while causing minimal disruption to U.S. consumers.

See Also: Bitcoin Hits $95K For The First Time Ever, Ethereum, Dogecoin Flat As Trump’s Crypto Policy Takes Shape: Top Analyst Describes BTC’s Path To $135K

Why It Matters: Goldman Sachs economist David Mericle warns that Trump’s proposed universal tariff could push inflation back to 3%, potentially complicating Federal Reserve monetary strategies.

The National Retail Federation estimates Trump’s tariff proposals could reduce annual consumer spending by $78 billion.

Prominent business leaders have voiced concerns. Citadel LLC CEO Ken Griffin described Trump’s proposed tariffs as a “long, slippery slope” that could hamper U.S. global competitiveness.

Retailers like AutoZone and Columbia Sportswear have signaled potential price increases that would be passed directly to consumers.

"Tariffs would create a headwind to the performance of stocks with high international revenue exposure due to the risk of retaliatory tariffs and heightened geopolitical tensions," Goldman Sachs analyst David Kostin stated.

Goldman Sachs noted that U.S. stocks with domestic sales focus outperformed those with international exposure by 1 percentage point the day after Trump's election and by 4 pp in the following month but underperformed by 9 pp in the next 12 months.

Key stocks in its Domestic Sales Basket include CVS Health Corp. , Wells Fargo & Co. , T-Mobile US Inc. , Verizon Communications Inc. , Lowe's Cos. Inc. , Intuit Inc. , and Union Pacific Corp. .

The International Sales Basket includes Meta Platforms Inc. , Broadcom Inc. , Visa Inc. , Mastercard Inc. , QUALCOMM Inc. , Netflix Inc. , McDonald's Corp. , Philip Morris Intl , Applied Materials Inc. , and Intel Corp. .

Read Next:

• Dollar Upside On The Cards Amid Geopolitical Tensions, Cautious Fed And Solid US Economic Data, Says Expert

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.https://www.benzinga.com/apis?utm_source=benzinga.com&utm_campaign=article-bottom

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Altria (MO) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.

Over the past month, shares of this owner of Philip Morris USA, the nation's largest cigarette maker have returned +11.6%, compared to the Zacks S&P 500 composite's +1% change. During this period, the Zacks Tobacco industry, which Altria falls in, has gained 8.9%. The key question now is: What could be the stock's future direction?

Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Earnings Estimate Revisions

Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

Altria is expected to post earnings of $1.28 per share for the current quarter, representing a year-over-year change of +8.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.3%.

The consensus earnings estimate of $5.11 for the current fiscal year indicates a year-over-year change of +3.2%. This estimate has changed +0.1% over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $5.30 indicates a change of +3.8% from what Altria is expected to report a year ago. Over the past month, the estimate has changed +0.1%.

Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Altria is rated Zacks Rank #3 (Hold).

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Projected Revenue Growth

While earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.

In the case of Altria, the consensus sales estimate of $5.04 billion for the current quarter points to a year-over-year change of +0.3%. The $20.38 billion and $20.37 billion estimates for the current and next fiscal years indicate changes of -0.6% and -0.1%, respectively.

Last Reported Results and Surprise History

Altria reported revenues of $5.34 billion in the last reported quarter, representing a year-over-year change of +1.3%. EPS of $1.38 for the same period compares with $1.28 a year ago.

Compared to the Zacks Consensus Estimate of $5.29 billion, the reported revenues represent a surprise of +1.05%. The EPS surprise was +1.47%.

Over the last four quarters, Altria surpassed consensus EPS estimates two times. The company topped consensus revenue estimates just once over this period.

Valuation

Without considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.

Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Altria is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom Line

The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Altria. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

Zacks Investment Research

A smart beta exchange traded fund, the Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS) debuted on 11/01/2006, and offers broad exposure to the Consumer Staples ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is managed by Invesco. RSPS has been able to amass assets over $304.66 million, making it one of the average sized ETFs in the Consumer Staples ETFs. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 EQL WEIGHT CONSUMER STAPLES INDX.

The S&P 500 Equal Weight Consumer Staples Index equally weights stocks in the consumer staples sector of the S&P 500 Index.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.40%.

The fund has a 12-month trailing dividend yield of 2.24%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

Representing 100% of the portfolio, the fund has heaviest allocation to the Consumer Staples sector.

Taking into account individual holdings, Lamb Weston Holdings Inc (LW) accounts for about 3.31% of the fund's total assets, followed by Philip Morris International Inc (PM) and Monster Beverage Corp (MNST).

RSPS's top 10 holdings account for about 28.5% of its total assets under management.

Performance and Risk

Year-to-date, the Invesco S&P 500 Equal Weight Consumer Staples ETF has lost about -0.60% so far, and it's up approximately 4.94% over the last 12 months (as of 11/20/2024). RSPS has traded between $30.08 and $32.93 in this past 52-week period.

RSPS has a beta of 0.59 and standard deviation of 13.50% for the trailing three-year period. With about 39 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco S&P 500 Equal Weight Consumer Staples ETF is a reasonable option for investors seeking to outperform the Consumer Staples ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard Consumer Staples ETF (VDC) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR ETF (XLP) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $7.14 billion in assets, Consumer Staples Select Sector SPDR ETF has $16.23 billion. VDC has an expense ratio of 0.10% and XLP charges 0.09%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Staples ETFs.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Zacks Investment Research