With the market falling for several weeks in a row, I thought it would be a good idea to research a strong defensive pick that will hold its value and probably gain while the indices drop. I came across this old reliable that seemingly grows its sales even if Armageddon were upon us (thankfully it wasn’t on May 21). However, if it did come, I think investors would still feel comfortable holding Altria Group (MO).
Altria Group, Inc. engages in the manufacture and sale of cigarettes, wine, and other tobacco products in the United States and internationally. It primarily offers cigarettes under the Marlboro, Virginia Slims, and Parliament brands; smokeless tobacco products under the Copenhagen, Skoal, Red Seal, and Husky brands.
Already Outperforming
In a very quiet manner, the stock is already up 13.5% year to date, which is more than double the return of the S&P 500. This is a strong return given the fact that it doesn’t even include its fat dividend yield north of 5%. I see this strong performance continuing for a few reasons.
First of all, I think investors will continue to be drawn to the consistency of its earnings and revenues. Stocks like this get noticed when the world grows more turbulent and with the economy seeming to be decelerating again, MO will garner its fair share of attention.
Investors love the fact that it has an excellent profit margin of 23.9% and an operating margin of 39.8%. Its ROE of 82.4% is phenomenal as well. These kinds of numbers are often fleeting at other companies, but are sustainable here. Cash flow is king during tougher times and MO provides investors with oodles of it.
MO has legal issues, but this has been the case for many years and the company keeps chugging along. If anything, it is free publicity for the company, even if it appears to be negative on the surface. These issues will always be with the company, but it has always been this way and the stock always takes it in stride.
The Chart
The chart is pretty self-explanatory in a good way. It is in a solid uptrend which is supported by a 45-degree 50-day moving average. Look for any pullback to be supported at that average around the $26.67 area. The stock will underperform the market if the broader indices soar upward, but will outperform in most other conditions. With economic activity on the downswing, look for the latter case to materialize.
Getting Technical: Smoking Up Some Profits is an article from: 
