Altria Group (MO) had a November it hopes to never remember. The stock traded lower 11 straight days, dropping from $66 to $53. That's four years of dividends erased in a little more than two weeks of trading. Ironically, this isn't the first time its happened to Altria... this year! In April, the stock dropped from $65 to $54 in roughly the same span of time.
While Altria offers its own e-cigarettes, it pales in comparison to the fast-growing Juul that boasts a 75% stake in the e-cigarette market. Despite the FDA threatening Juul, Altria has discussed taking a minority stake in the company, this coming via the Wall Street Journal.
Not content to stop there, Reuters, Bloomberg, and a host of other news outlets reported that Altria may be in talks to acquire Cronos Group (CRON) , a Canadian medical marijuana name. This report caused a spike in CRON shares earlier today and spurred a rally in the cannabis sector. The Financial Times went on to add Altria also spoke with Tilray (TLRY) and Aphria (APHA) about developing beverages.
The days of tobacco may not be dead, but the winds are changing. Vaping, cannabis, and cannabis-infused drinks are the growth areas of sin. Either move should benefit MO, but both might transform the company out of value and back into a blend name of growth and value. I won't comment about the morality of owning a name since that is for every investor to decide upon their own.
With Altria trading at 2015 levels, churning out large chunks of cash to shareholders, and not resting on its legacy business, the stock may serve up sinful returns for open-minded investors. Catching a falling knife is a no-no in the investment world, but we've seen MO bounce over the past week creating support around $53 with resistance now around $56. I like it as a partial entry now with the remainder of the position bought over $58 or any additional weakness that pushes shares to $50.