Tobacco stocks have taken a beating over the last few years as decades of stonewalling caught up with tobacco companies and billions were paid in lost law suits and settlements. The once-king of American tobacco, Phillip Morris, is now the Altria group. Altria group is struggling to get its stock price back up despite lucrative dividends. Trading the Marlboro man may be smart as, at some point, Altria Group and other tobacco stocks will have paid for their misdeeds and will continue to make money from selling cigarettes and from their other investments. (Altria Group, for example, holds a nearly 30% stake in a large British brewery, SABMiller plc, and Ste Michelle Wine Estates, a maker of fine wines.

Altria Group no longer has any share of Kraft Foods nor of Phillip Morris International. Altria Group is, however, not just an American tobacco company. Its holdings in alcoholic beverages allows it to diversify a bit. Nevertheless, they still sell cigarettes and, despite all efforts to reduce smoking, people still smoke. Altria group is paying nice dividends and will be a money maker forever, providing that a last, monumental, law suit does not wipe them off of the map. That is where trading the Marlboro man comes in.

If you take out the social issue of smoking and focus on trading a stock for profit then Altria Group may just be ideal. Trading the Marlboro Man will involve watching law suits unfold and get settled or tried in court. Altria Group stock will rise and fall based upon the news. In the meantime Altria group will keep selling tobacco and, probably, increasing its non tobacco holdings, making more profits along the way. They will probably keep paying healthy six and seven percent dividends in order to attract investors.

Altria Group stock as gone up $4 a share in the last year. It was a little over $14 a share a year ago and about $18.45 a share now. Look for “legal news” and try to be there the stock moves.

As usual, we are not especially promoting the trading of Altria Group, ie trading the Marlboro Man, but encouraging you to look for trading opportunities, A little homework and advance planning will put you in a position to buy or sell options to take advantage of a stock move or to be there when a announcement of “legal news” makes Altria Group stock jump or drop.

This year Altria Group bought the world’s leading smokeless tobacco maker UST Inc. One current issue is whether or not they paid too much. This purchase along with the acuistion of nearly 30 percent of one of the world’s largest breweries, SABMiller plc, would lead one to think that the company is diversifying away from an all tobacco base which should at some level reduce its lawsuit exposure. That is also a reason to expect some stock fluctuation. Remember that when the Altria Group of old, Phillip Morris, bought Kraft they did not manage the food company especially well. Where they made money was in tobacco. The diversifying moves of Altria Group could backfire causing the stock to flop, further justifying trading the Marlboro Man.

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