September 7, 2010 | In: Consumer - Non Cyclical

PM At Nearly An All Time High

I have written about PM before, and I labeled it as the “Ultimate Sin Stock” because of the ethical implications when trading this stock. Now I looked at PM again, purely from an investor’s perspective, and I can see that it’s almost at an all time high, apparently sin stocks always perform well. But to be honest, I was amazed that the stock is going up, amidst all the new regulations (banning smoking in almost any enclosed space, checking for IDs before selling to people who seem like minors, forcing tobacco companies to place scary health warnings on the box, etc…), and not only that, I do feel that smoking is no longer cool, which results in even less people smoking. BUT, look at these statistics, smoking started picking up again in 2008 (in the US) after a long, and constant decline, so it might be that smoking is also up in 2009, and 2010 (maybe people are reacting to the bad economy by just smoking). There is also an important factor, tobacco companies are marketing geniuses, they always try to make smoking seem like a rugged behavior (for men) or a classy habit (for women). Smoking also, is a great way to socialize:

- You go out and have smoke, another person goes out and have a smoke, and you meet, you talk, etc…
- You’re walking on the street and smoking, and someone just asks you for a lighter, and you may talk, and socialize…

Tobacco companies are also very good at expanding in emerging markets, which is probably why the stock is going up… I do think though that PM is now overpriced and I predict a correction to the $52 level soon.

PM is a buy below $50, and is a great buy below the $47 mark, if we’re ever to see this level again…

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