19Apr3:29 pmEST

The True Head of the American Alliance from Jump Street

Tobacco and North America have been the true dynamic duo, long before the founding of the United States of America. Evidence suggests tobacco was growing in North America by 6,000 BCE, and smoking tobacco leaves may have been practiced on the continent for 2,300 years. Furthermore, settlers grew tobacco in the streets of Jamestown (America's first permanent English colony, in Virginia in 1607, over a decade before the Pilgrims came) during the Settlement as a major part of the economy--The yellow-leafed crop even covered cemeteries! 

All of this means that, despite how many have called for the end of tobacco stocks over the years, MO (and its international spinoff, PM) both continue to defy the skeptics. 

Altria (MO), is selling off sharply late in the session today on news, that the Biden Administration is  considering rules to cut nicotine in cigarettes. While regulatory and litigation risk is, frankly, omnipresent with tobacco stocks, let's be honest: The market knows that, which is why they typically trade with low valuation. You are still getting a 6.5% dividend with MO these days, and the stock is well off all-time highs despite its recent multi-month rally as value plays come back into favor. 

Above all else, MO's weekly chart, below, illustrates why I do not view this news with fear. The stock is backing off its 200-period weekly moving average (arrow, yellow line) after its steep recent rally. I would like to see $45 hold into dips, but anything over $40 should keep the bull thesis intact going forward. 

If you have been looking to get into MO but did not want to chase such a defensive name, I would be closely stalking this pullback in the coming weeks for stabilization and a resumption of its long-term breakout. 

A Skirmish or Something More... The Stock Market's Version o...


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