There's no question Americans are facing unprecedented stresses these days. Data suggests some Americans are relying on vices such as alcohol, tobacco and cannabis to get through the health crisis. At the same time, gamblers have been driven online for the time being due to casino closures.When times are good, people like to celebrate with a drink or a smoke or a roll of the dice. When times are hard, they turn to these activities as a distraction or a means of self-medication. Regardless of how you feel about the activities themselves, here are seven "sin stocks" to buy that Morningstar analysts say have significant upside.Philip Morris International Inc. (NYSE: PM)Philip Morris is one of the largest global tobacco companies and holds nearly a 30% market share of the international cigarette and heated tobacco markets.Analyst Philip Gorham says Marlboro customer loyalty is extremely high and Philip Morris has considerable pricing power. The company has a first-mover advantage in heated tobacco, but it remains to be seen whether or not heated tobacco can completely offset lost cigarette volumes over time. Gorham says a successful launch of iQOS in the U.S. would generate completely incremental revenue given the company currently has no U.S. products.Philip Morris shares also pay a sizable 6.9% dividend.Morningstar has a Buy rating and $98 price target for PM stock.See Also: 7 Best Cheap Stocks To Buy Or Sell Cronos Group Inc (NASDAQ: CRON)Cronos is one of the "big four" Canadian legal producers of cannabis and owner of brands such as PEACE NATURALS, COVE and Lord Jones. Cronos reported impressive 180% revenue growth in the first quarter, but it also reported a $45 million operating loss.Analyst Kristoffer Inton says write-downs associated with lower prices due to oversupply in the Canadian market were the cause of the loss. However, Inton says Cronos' write-downs are shrinking, whereas other cannabis producers' losses are growing. Morningstar is projecting Canadian cannabis demand will grow 20% annually over the next decade, and Cronos has the balance sheet to expand its market share.Morningstar has a Buy rating and $8.50 fair value estimate for CRON stock.Las Vegas Sands Corp. (NYSE: LVS)Las Vegas Sands is an international casino operator that owns casino resorts and hotels in Las Vegas, Macau and Singapore. Analyst Dan Wasiolek says Macau and Singapore are the keys to the bull case for Las Vegas Sands.Macau accounted for about 59% of Sands' earnings in 2019, and Singapore was another 31%. Wasiolek says Sand's has a dominant position in the high-growth Cotai Strip in Macau, and it has a duopoly in place in Singapore through at least 2030. COVID-19 shutdowns in Las Vegas and a 97% drop in gross gaming revenue due to COVID-19 may be scary, but Wasiolek estimates Las Vegas sands has 18 months of liquidity at nearly zero revenue.Mornigstar has a Buy rating and $62 fair value estimate for LVS stock.British American Tobacco PLC (NYSE: BTI)British American Tobacco is an international tobacco company that owns brands such as Lucky Strike, Newport and Camel and generates 45% of its revenue from the U.S. market.While cigarette volumes are likely in secular decline, Gorham says British American's accelerated volume declines in fiscal 2019 may be particularly troubling to investors. However, he says the company may be best-positioned to capitalize on the next generation of tobacco products, including its Vype and Vuse vaping brands an Glo heated tobacco brand. Gorham says British American's buyout of Reynolds American was a solid strategic move given its pricing power and the value of its assets.Morningstar has a Buy rating and $59 target for BTI stock.Anheuser Busch Inbev NV (NYSE: BUD)Anheuser Busch Inbev is the world's largest brewer and owner of brands such as Budweiser, Beck's and Corona.Gorham says the worst of the downturn may be yet to come for Anheuser Busch, but the company has plenty of liquidity to navigate the crisis. In the longer term, he says the company's near monopoly and cost advantages in developed markets make the stock a solid investment, and its potential for free cash flow generation isn't fully priced in at current levels. Gorham projects volumes will fall 20% in the first half of 2020 and only 7% in the second half of the year.Morningstar has a Buy rating and $96 fair value estimate for BUD stock.Altria Group Inc (NYSE: MO)Altria Group is one of the world's largest tobacco companies, but it's also one of the most diversified sin stocks. In addition to being the parent company of Philip Morris USA, Altria has a more than 10% ownership stake in Anheuser Busch, a 35% stake in vaping leader JUUL, and a 45% stake in cannabis stock Cronos.Gorham says COVID-19 has certainly disrupted Altria's business, but its underlying business trends in the first quarter appear to be solid. Cigarette shipment volume was up 6%, and management reiterated its guidance that industry-wide volume will drop between 4% and 6% this year.Morningstar has a Buy rating and $54 fair value estimate for MO stock.See Also: 7 Best-Performing Stocks Of 2020: Buy, Sell Or Hold?Constellation Brands, Inc. (NYSE: STZ)Constellation Brands is one of the world's largest producers of wine, spirits and imported beer and owns brands such as Arbor Mist, Black Velvet and SVEDKA. Constellation also recently upped its ownership stake in leading Canadian cannabis producer Canopy Growth Corp (NYSE: CGC) to nearly 40%.Analyst Nicholas Johnson says Constellation's beer business should help support numbers for now, and the sell-off in the stock has pushed it to "egregiously cheap" levels. In fact, given his bullish long-term outlook for Constellation, Johnson says it's his top stock pick in the pure-play beverage group.Morningstar has a Buy rating and $215 price target for STZ stock.Latest Ratings for CRON DateFirmActionFromTo May 2020StifelMaintainsHold Apr 2020Piper SandlerDowngradesOverweightNeutral Apr 2020B of A SecuritiesDowngradesBuyNeutral View More Analyst Ratings for CRON View the Latest Analyst RatingsSee more from Benzinga * Here's How Much Investing 0 In The 2018 Cronos Listing Would Be Worth Today * The Road To Recovery For Las Vegas Casino Stocks * Cannabis Stock Rally Puts Short Sellers In The Red For 2020(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
S&P; 500 down 3.07% Continue reading...
COVID-19's impact has been crippling, but something positive may come from the pandemic. Billionaire Ray Dalio said in a live LinkedIn interview that in terms of the broader historical context, the recent economic downturn should be “relatively brief," and could spur significant societal progress. This would include a worldwide “restructuring” lasting approximately three to five years.“I know that’s a long time, but it’s not forever. The human capacity to adapt and invent and come out of this is much greater,” Dalio commented. He added, “I think we should be very excited about the new future. We’re now in a wonderful revolution in terms of the capacity to think and use that in a way. I would say that is absolutely the most treasured thing in the future.”Still making sure to account for the unknowns, Dalio has been diversifying his investments across geographic locations, asset class and currencies throughout the ongoing public health crisis. Looking to Dalio for investing inspiration, we used TipRanks’ database to find out if three stocks the billionaire recently added to the fund represent compelling plays. According to the platform, the analyst community believes they do, with all of the picks earning “Strong Buy” consensus ratings. Let’s jump right in.Philip Morris International (PM)Cigarette and tobacco manufacturing company Philip Morris has become known as a “sin stock." However, regardless of its product portfolio, Dalio sees plenty of upside in store.Recently, the billionaire’s fund acquired a new position in PM, snapping up 67,447 shares. The value of this new addition? More than $4.9 million.Turning now to the analysts, the stock boasts a strong fan base, which includes Piper Sandler’s Michael Lavery. He doesn’t dispute the fact that there are some headwinds facing the company. “PM expects near-term iQOS new user acquisition to be about 50% lower than it originally planned due to social distancing measures that have shut iQOS stores and made it harder to engage with consumers,” Lavery stated.That being said, the company has already surpassed Lavery’s expectations, which were cut to near-zero. The analyst even says that if PM can maintain the pace of its customer acquisition, there could be upside to his estimates. The analyst added, “We expect HeatStick volume growth of 20% in 2020E (1Q20: +45%) and believe 90-100 billion sticks in 2021 is still achievable.”While lower duty-free volumes and down-trading in Indonesia could take a toll on second quarter EPS, Lavery remains optimistic. “We remain bullish on PM's strong long-term outlook, and we expect nicotine demand to remain resilient near-term (particularly in times of personal stress),” he explained.It should also be noted that PM has had to grapple with patent infringement claims from British American Tobacco (BAT) and a transactional currency hit. Speaking to the first issue, Lavery said, “We reviewed BAT's six patents named in its U.S. complaint, and it is difficult to handicap an outcome, but a third-party reviewer of patents generally did not give BAT's relevant ones here very high marks.”As for the latter, Lavery points out that about $100 million of the currency hit in the first quarter of 2020 was driven by the revaluation of euro or dollar denominated payables in markets like Russia, but he doesn’t foresee another event of this magnitude happening again.Based on all of the above, Lavery kept an Overweight rating on the stock. He did reduce the price target from $98 to $95, but this still implies shares could climb 40% higher in the next year. (To watch Lavery’s track record, click here) Judging by the consensus breakdown, other analysts are in agreement. 7 Buys and 2 Holds add up to a Strong Buy consensus rating. In addition, the $83.56 average price target brings the upside potential to 23%. (See Philip Morris stock analysis on TipRanks)UnitedHealth Group (UNH)Hoping to help people live healthier lives and make the healthcare system work more efficiently, UnitedHealth Group offers a wide range of healthcare products and insurance services. While the late-March acceleration of the COVID-19 pandemic resulted in a somewhat lackluster quarter, Dalio believes the company’s future is bright.To this end, Bridgewater went in on UNH. In a purchase valued at $5,481,000, Dalio’s hedge fund scooped up 21,977 shares.Five-star analyst Michael Wiederhorn agrees that UNH is moving on to bigger and better things, noting that its Q1 performance was relatively solid. “Overall, UNH produced strong results and seems well-positioned to navigate the COVID pandemic due to a relatively stable top-line, a diversified business mix and a dominant position across its businesses.”Wiederhorn tells investors that management thinks the slowdown in non-COVID-irelated utilization, which was driven by highly constrained elective care and will be offset by the late-year pent-up utilization, will have a significant impact on MCR in the second quarter. As a result, despite some uncertainty surrounding COVID-19's impact, UNH maintained its full year 2020 EPS guidance of $16.25-$16.55.Adding to the good news, Wiederhorn argues that its Optum segment has a strong standing within the market. Expounding on this, he noted, “Trends at Optum remained solid, and management did note that even OptumHealth should be positioned to hold up relatively well due to its reliance on risk-based contracts, accounting for two thirds of revenues. Both OptumRx and OptumInsight have strong pipelines (though the timing of meetings was disrupted) with the latter of particular interest as companies look to improve the economics and delivery of healthcare.”Even though commercial enrollment could be hampered by elevated levels of unemployment, higher Medicaid should partially offset this. Additionally, UNH is in the early stages of pricing and benefit design for 2021, with its plans possibly including pricing for COVID-19 testing and a potential vaccine.Bearing this in mind, Wiederhorn maintained an Outperform call and $343 price target. Should this target be met, a twelve-month gain of 18% could be in the cards. (To watch Wiederhorn’s track record, click here)Turning now to the rest of the Street, other analysts also like what they’re seeing. With 12 Buys and 2 Holds, the word on the Street is that UNH is a Strong Buy. At $326.23, the average price target indicates 12% upside potential. (See UnitedHealth stock analysis on TipRanks)Accenture PLC (ACN)Dalio’s third recent addition, Accenture, provides management and technology consulting services and solutions to help its clients, which inhabit almost every industry, create lasting value. With the company relying on a new strategy, Dalio thinks it has set itself up for success.Not wanting to miss out on a compelling opportunity, Bridgewater pulled the trigger on 27,763 shares, giving it a new position in ACN. Looking at the value of the new holding, it comes in at more than $4.5 million.When it comes to the analysts, they are also singing the company’s praises. Writing for BNP Paribas, analyst Ben Castillo-Bernaus argues that COVID-19's disruption has presented investors with an opportunity to buy a “high-quality” IT service company, with ACN trading well below historical five-year average EBIT multiples.“Accenture remains ‘best in class’ and the recent weakness is an opportunity to gain a position in this IT Services global leader delivering 40% returns on capital,” Castillo-Bernaus stated. He added, “Accenture has been a pioneer in developing ‘the New’ with 65% of revenues now coming from high growth Digital, Cloud and Security services.”As for what makes the company so successful and allows it to continuously take market share, Castillo-Bernaus points to its investments in new technologies and growth areas. To back up this conclusion, the analyst cites its EUR1 billion investment in training each year and EUR800 million investment in R&D all while delivering margin improvements every year. On top of this, ACN conducts smaller-scale M&A, with it working alongside the companies before an acquisition to limit any potential deal failures.Castillo-Bernaus also noted, “We believe Accenture has customers that spend more than $100 million annually, with 98% of Accenture’s top 100 clients having been clients for more than five years. These ‘sticky’ relationships help Accenture maintain high margins and high returns as Accenture has a high number of ‘sole source’ wins where it does not even see competition in RFPs.”That being said, the company has started using a new approach. It will now organize itself by Strategy & Consulting, Interactive, Technology and Operations instead of by verticals, and the results will be reported geographically for these segments. “We believe it is too early to tell what kind of impact these changes will have, but Accenture has a positive track record of occasionally tweaking its growth strategy in order to best deliver on the opportunities ahead,” Castillo-Bernaus commented.It should come as no surprise, then, that Castillo-Bernaus joined the bulls. Along with an Outperform rating, he initiated coverage by setting a $215 price target. This target conveys the analyst’s confidence in ACN's ability to surge 17% in the next twelve months.In general, other Wall Street analysts have also been impressed. ACN’s Strong Buy consensus rating breaks down into 13 Buys and 2 Holds assigned in the last three months. However, the $195.29 average price target suggests modest upside potential of 6%. (See Accenture stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
The $165 billion hedge fund releases portfolio in a coronavirus-driven landscape Continue reading...
Staples stocks had a decent Q1 earnings season but will see negative currency translations in Q2. Plus, not all players in the sector are immune to coronavirus-led lockdowns.
Panic surrounding the coronavirus disease 2019 (COVID-19) pandemic wound up pushing the benchmark S&P 500 to its fastest bear market in history, and it ultimately cost the index 34% of its value in a 33-calendar-day stretch. While it's common for panic selling of this nature to concern investors, it's also important to realize that every bear market in history has proved to be an excellent opportunity for long-term-minded investors to put their capital to work. Historically speaking, there's probably not a smarter thing you can do with your cash than to buy dividend stocks.
Tobacco giant Altria is trying to become less of a cigarette company, as demand fades, but is the stock a buy right now?
A private company by the name of Thought Leaders has invested $1 million in an emerging vape company that looks to be the first tobacco and cannabis crossover that doesn't use an oil cartridge. Cannabis Technology House, or CTH, has created a unique product called QUB (pronounced like cube) that heats cannabis flower or tobacco leaf instead of burning it.
Firm's largest sales of the 1st quarter Continue reading...
More than 60 workers at a factory run by the Indonesian unit of U.S. tobacco giant Philip Morris have tested positive for the coronavirus after operations were suspended when two staff died from COVID-19, a provincial government official said. PT Hanjaya Mandala Sampoerna Tbk, one of Indonesia's largest cigarette companies, halted operations at its factory in the East Java city of Surabaya on April 26 after the two deaths, with subsequent testing revealing a coronavirus cluster. Joni Wahyuhadi of the East Java COVID-19 taskforce said 61 workers had tested positive for the coronavirus.
As smoking is becoming more of a taboo rather than a simple habit that it used to be, tobacco market is shrinking and companies are forced to improve their strategies in order to survive. Therefore, in today’s article we will research some of the most expensive cigarette brands in 2019. Smoking restriction laws are bringing […]
The U.S. International Trade Commission has announced a probe into Altria and Philip Morris for alleged patent violations over iQOS heat-not-burn technology.
Philip Morris (PM) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
Coronavirus is probably the 1 concern in investors' minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 […]
Tobacco companies aren't quite immune to economic impacts, though, and Philip Morris International (NYSE: PM) hasn't held up nearly as well as some companies in the food and household products categories. For Philip Morris, a long transition away from traditional cigarettes toward reduced-risk alternatives has taken investors for a bumpy ride, but the company remains hopeful that its long-term strategy remains sound. Let's look more closely at the tobacco giant to see if Philip Morris stock is a good buy.
(Bloomberg Opinion) -- After a prolonged shutdown, Ford Motor Co. officially resumed production at its North American factories this week. It hasn’t been as smooth a process as the company might have hoped: Ford had to temporarily close two critical facilities this week to allow for a deep cleaning after workers tested positive for the coronavirus. An Explorer SUV plant in Chicago was closed a second time after an employee at a nearby supplier facility tested positive for the virus, causing a parts shortage.This is the reality of manufacturing for the time being as companies fret about worker safety and the legal and reputational risks of not doing enough to protect employees. Unlike Ford, whose products fall into a category of consumer spending that’s become even more discretionary amid the pandemic, wide swaths of the industrial sector were deemed essential and allowed to remain operational. Those companies, too, have had their share of growing pains as they adjust to a new way of working.Boeing Co. temporarily closed its factories in the Puget Sound area in March after a worker died of the coronavirus and later briefly shuttered work at its 787 plant in South Carolina. CBS Minnesota reported earlier this month that a Honeywell International Inc. facility in Minneapolis had closed after a worker tested positive. Whirlpool Corp. closed its Amana, Iowa, refrigerator plant at least twice after employees tested positive for the virus, according to the Gazette local paper. Deere & Co. and Altria Group Inc.’s Philip Morris USA are among the many others that have had to close plants on a limited basis to avoid outbreaks among workers. Lockheed Martin Corp., meanwhile, said this week it will temporarily slow production of the F-35 fighter jet because of delays at suppliers. It’s a lot harder, though, to bring factories back to life than it is to just figure it out as you go along. Ford may be a manufacturer, but because it’s one of the few to have experienced an extended lockdown, it’s arguably a better benchmark for the non-industrial economy. You better believe that office-based companies that have sent most of their workers home are keeping a close eye on how the likes of Ford fare in flipping the switch back on. Seeing the automaker’s setbacks this week, companies that can operate without their employees clustered in the same place may be less keen to rush back. They’re getting a more continuous stream of work out of their employees now than they would if they had to hit the pause button and clear out the office every few weeks. And the mixed messages from the White House aren't helpful: President Donald Trump is due to visit a Ford factory in Michigan that’s been converted to ventilator production and has been wishy-washy on whether he will adhere to the company’s face-mask requirements. Already, American Express Co. CEO Steve Squeri and Visa Inc. CEO Al Kelly said this week that most of their employees would work from home for the rest of the year. Some 28% of employers recently surveyed by Challenger, Gray & Christmas said they would make work-from-home arrangements permanent for at least some employees. Cryptocurrency exchange Coinbase and social media site Twitter Inc. are among those who have publicly said remote working will be their indefinite default option. Facebook Inc. said Thursday it would follow suit and move to a more permanent remote workforce.At the end of the day, manufacturing or non-manufacturing, it's all interconnected. How permanent this shift to work from home will be is debatable, but if companies end up needing less office space, by default that means fewer HVAC systems, commercial lighting, fire and security products or even 3M Co.’s Post-it notes. And if workers aren’t going to be commuting, do they still need to buy cars from Ford? There's a lot riding on getting reopening right. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Q1 2020 Philip Morris International Inc Earnings Call
Tobacco Industry Outlook Smoking Hot on Pricing & RRP Focus
These three companies are solid dividend payers that are at lower prices than they were earlier this year.
We highlight the impact of Philip Morris' Q1 earnings on ETFs with significant exposure to the company.