For Immediate Release
Chicago, IL – December 10, 2009 – Zacks.com releases the latest Zacks Industry Rank. Stocks featured in this week’s analysis include Universal Corp of Virginia (UVV), British American Tobacco (BTI), Imperial Tobacco (ITYBY), Phillip Morris (PM) and Altria (MO).
Zacks Industry Rank Analysis is written by Dirk Van Dijk, CFA, Chief Equity Strategist for Zacks.com.
This week: How to “Light Up” Your Portfolio
One industry that looks very strong is a member of the Consumer Staples sector, a sector that has been near the top of the rankings for some time now, and it is Tobacco. While I realize that many have a problem investing in an industry that is associated with so many premature deaths not only in this country but around the world, it is an industry that has proven itself to be recession-resistant over and over again, and which throws off a lot of free cash flow. That free cash flow is shared with the shareholders in the form of very generous dividend yields and active share repurchase programs.
The Tobacco industry is currently tied for 17th place among the 206 industries ranked, an improvement of 19 spots. Its average Zacks Rank is 2.33, vs. 2.56 last week. While the number of firms in the industry is relatively small at nine (the smaller the number of firms in the industry, the more likely it will show up at either the top or the bottom of the list), the firms in it are relatively large.
None of the firms has a negative score of 4 or 5, and four have ranks of 2 (Buy) while Universal Corp of Virginia (UVV) has earned a coveted number 1 ranking. The Tobacco industry is also a good way to profit from a weak dollar, since many of the firms earn a very high proportion of their revenues from abroad. This is particularly true of some of the number 2-ranked stocks, including British American Tobacco (BTI), Imperial Tobacco (ITYBY) and Phillip Morris (PM). In the case of PM, 100% of its revenues come from overseas ( Altria [MO], ranked 3, has the U.S. rights to the brands).
On average, the five firms with Zacks Ranks of 1 or 2 are selling for just 11.6x 2009 earnings and 10.7x 2010 earnings, while yielding 4.7%. These stocks could just “light up” your portfolio returns.
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Contact: Dirk Van Dijk, CFA
Company: Zacks.com
Phone: 312-265-9211
Email: pr@zacks.com
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