Tag Archives: Philip Morris

Looming Dangers Arise in Secret Underground Cigarette Trade

By Jacob Roche, The Motley Fool

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Between 2006 and 2012, illegal smuggling of this product grew by more than 15%. The trade is largely run by organized crime. Government policy can be blamed for at least part of the problem.

Am I talking about cocaine? Marijuana? No, just the humble cigarette.

A recent report from research group KPMG, and commissioned by Philip Morris , revealed that while total consumption of cigarettes in Europe has fallen in recent years, the illegal contraband and counterfeit trade has grown from 8.3% of total consumption to 11.1%. The report suggests that the high profitability and low risk of penalties attracts organized crime, which can use the trade as a cash cow to fund far more objectionable activities. An ad from British American Tobacco goes as far as to suggest that the trade could even be indirectly funding terrorism.

There’s a black market for everything
But why are people buying illegal cigarettes? Restrictions differ from country to country, but on the whole, cigarettes are legal and can easily be purchased. The trouble is that, because taxes and regulations vary so widely between countries, the price for consumers varies as well. A pack of Marlboros costs 6.69 euros in Sweden, and 13.18 euros in next-door Norway. In Ukraine, they sell for just 1.31 euros.

The differential makes it easy for smugglers to buy large quantities in cheap countries, bring them into more expensive countries, and sell them at some in-between price to profit. These large quantities are available in part because the large cigarette companies overproduce in cheaper countries. Ukrainian authorities estimate that the world’s four leading tobacco companies — Philip Morris, Japan Tobacco, Imperial Tobacco, and British American Tobacco — produced about 130 billion cigarettes in the country in 2008, 30% more than the local market consumed or legally exported. The rest simply disappeared into the black market, making Ukraine one of the top sources of non-counterfeit black market cigarettes.

What’s the impact?
Apart from the whole “funding organized crime” thing, the trade has a negative impact on both countries and cigarette manufacturers. It is estimated that governments around the world lost $40 billion to $50 billion in tax revenue in 2006, and that’s just from lost cigarette taxes — the losses are higher if you factor in things like unpaid income taxes from the money smugglers make.

As for manufacturers, there are two problems they face. The first should be obvious: If any of them are knowingly involved in undeclared overproduction, they may be criminally liable. Even if they aren’t knowingly involved, government authorities are likely to decide that manufactures are at least partially responsible for cleaning up the mess. The report by KPMG, for example, was only commissioned by Philip Morris as part of a 2004 legal settlement with European regulators.

The other problem is that not all illegal cigarettes are legitimate ones being smuggled. Many are simply counterfeits, dressed up to look like a real pack of Marlboros or

Source: FULL ARTICLE at DailyFinance

The 3 Silliest Company Name Changes Ever

By Dan Caplinger, The Motley Fool

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The best companies in the world invest huge amounts of money and energy into building name awareness. The right name can be worth tens of billions of dollars to a company, making it all the more important for companies to make the best choice.

Often, though, companies pick what seem on the surface to be ill-considered new names. Inspired by Thursday’s announcement from Coinstar to seek shareholder approval to change its name to Outerwall, here’s a list of five company name changes that earned criticism and even outright mockery when they were first proposed.

2001: Altria
In late 2001, the company then known as Philip Morris made a proposal to change its name to Altria. The origin of the name was founded in the Latin word “altus,” meaning “high,” and was meant to associate the company with peak performance. The “tri” embedded in the name also emphasized the fact that the company at the time had three distinct divisions: domestic tobacco, international tobacco, and its Kraft Foods beverage and food division.

Image copyright Altria Group.

The name change reflected the company’s wish to have consumers and investors see beyond its tobacco business, which at the time was plagued by more substantial legal battles with billions in potential liability hanging in the balance. Shareholders approved the name change in 2002. The irony, of course, is that Altria has since spun off both Kraft and its Philip Morris International global tobacco divisions, leaving Altria holding the old core Philip Morris USA division.

2011: Qwikster
Fortunately, this name change never actually took place, but for the short period that Netflix considered it, Qwikster caused both an uproar among customers and a crisis of confidence for Netflix investors. The idea was to separate out Netflix’s legacy DVD business from its faster-growing, higher-potential video streaming business and rename the DVD-delivery company Qwikster, with the streaming business keeping the Netflix name.

Image: Wikimedia Commons, photographed by user Coolcaesar.

But coming on the heels of a bungled rate-increase announcement that sent costs up as much as 60% for users who wanted to keep both services, the proposed Qwikster name became closely affiliated with the misstep. The stock also plunged, losing half its value — more than $100 per share — in less than a month from the time of the rate increase to the time Netflix backed away from the proposal.

2012: Mondelez International
Kraft has been associated with two different name-change controversies. Last year, the company broke into two parts, with its North American grocery division keeping the legacy Kraft name while its global snack-food business changed its name to Mondelez International . In explaining the change, the company said that Mondelez “is a newly coined word that evokes the idea of a world of ‘delicious products.'”

The company helped come up with the idea by having an

Source: FULL ARTICLE at DailyFinance

Lower Volume Hurts Philip Morris Results

By 24/7 Wall St.

Filed under: ,

Philip Morris International Inc. (NYSE: PM) reported first-quarter results before markets opened this morning. The tobacco products firm posted adjusted diluted earnings per share (EPS) of $1.29 on revenue of $7.6 billion. In the same period a year ago the company reported EPS of $1.25 on $7.45 billion in revenues. Thomson Reuters had consensus estimates for EPS of $1.34 and revenue of $7.52 billion.

On a GAAP basis, EPS totaled $1.28. The company also said that currency exchange rates cut earnings by $0.07 a share.

Cigarette shipment volume fell 6.5% year-over-year globally and by 42.5% in the Philippines, where a new excise tax cut shipments by 10 billion units. European volume fell 10.1% and Asian shipments fell 10.4%. Only the Eastern Europe, Middle East and Africa posted a gain, and that a small one of 1.4%. The company was able to make up some of the decrease by raising prices.

The company lowered its full fiscal year EPS guidance to a range of $5.55 to $5.65, compared with full-year 2012 EPS of $5.22. The forecast includes a $0.19 per share reduction due to currency exchange rates. The consensus estimate had called for full-year EPS of $5.73 on revenues of $32.37 billion.

The company’s CEO noted:

Our first quarter was relatively difficult, with our headline results marred by a number of known factors, including inventory movements, the 2012 leap year effect, currency and a slowly improving – but nevertheless substantial erosion in our – volume in the Philippines. Despite this apparent weakness, our pricing actions and market share momentum provide us with the confidence to reiterate our annual constant-currency adjusted diluted EPS growth rate target of 10-12%.

What makes tobacco companies so attractive to investors is their dividend, and Philip Morris pays a quarterly dividend of $0.85. The company repurchased 16.7 million shares of its own stock in the first quarter at a cost of $1.5 billion. Philip Morris plans to spend $18 billion on share repurchases in a three-year program that began in the third quarter of last year. So far the company has spent $4.35 billion on share buybacks.

The company’s shares closed down about 1% last night, at $94.04 and are inactive so far this morning. The stock‘s 52-week range is $81.10-$96.60. Thomson Reuters had a consensus analyst price target of around $97.60 before today’s report.

Filed under: 24/7 Wall St. Wire, Earnings, International Markets, Tobacco Tagged: PM

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From: http://www.dailyfinance.com/2013/04/18/lower-volume-hurts-philip-morris-results/

An Empire Built With Two Pennies and an Industry Upset for the Ages

By Alex Planes, The Motley Fool

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On this day in economic and financial history…

Travelers  began doing business in the closing days of the Civil War, on April 1, 1864. On this day, company founder James G. Batterson issued the first Travelers written insurance policy to himself, a ceremonial transaction that nevertheless marked the official beginning of travel insurance in the United States. Several days earlier Batterson had engaged in the first unofficial insurance transaction for the yet-to-be-created accident-insurance company. Travelers recounts the incident on its history timeline:

Travelers was founded more than a century ago through an off-hand transaction of only two cents. The two cent incident occurred on March 24, 1864, when a Hartford businessman, James G. Batterson, met a local banker, James E. Bolter, in the post office. Bolter had heard that Batterson and several fellow townsmen were organizing a company for the purpose of introducing accident insurance to North America.

“I’m on my way home for lunch,” Bolter said. “How much would you charge to insure me against accident between here and Buckingham Street?”

“Two cents,” Batterson quoted promptly, as he took Bolter’ two pennies and tucked them into his vest pocket. Bolter walked the four blocks to his home without mishap. His two cent “premium” is a souvenir treasured by the company Mr. Batterson founded, Travelers.

In the years that followed, Travelers became the go-to source of travel insurance, with a client roster including legendary circus showman P. T. Barnum, department store pioneer John Wanamaker, abolitionist William Lloyd Garrison, and James Harper, co-founder of the Harper Brothers publishing house (the flagship imprint of today’s HarperCollins). As transportation opportunities expanded from steamships to railroads to automobiles and finally to aircraft, so too did the travel insurance industry. Today, more than $1 billion in travel insurance premiums are collected by Travelers and other insurers each year.

Travelers went through two notable mergers between the end of the 1990s and the middle of the 2000s. The first, which formed Citigroup , is directly responsible for repealing Glass-Steagall and ushering in a new era of megabanks. Two years after Citi divested the insurer in 2002 (insurance and banking didn’t go together quite as harmoniously as chocolate and peanut butter), Travelers and St. Paul Fire and Marine Insurance, another Civil War-era insurer, merged to create the Travelers of today. This merger was completed on April 1, 2004, exactly 140 years after James G. Batterson sold that first Travelers policy to himself and began an insurance empire.

Small beginnings for the biggest of Big Tobacco
Philip Morris & Co, the predecessor of Altria , was incorporated in New York in April of 1902 as the American arm of a London tobacconist with the same name. As the U.S. was then the world’s primary tobacco-grower, it made little sense for London‘s Philip Morris to export there, particularly in light of the U.S.’ high tobacco-importation tariffs. In its first full year of operation, Philip Morris sold …read more
Source: FULL ARTICLE at DailyFinance

This Buffett Rule Uncovers the Best-Performing Stock of the Last Half-Century

By Austin Smith and Jeremy Phillips, The Motley Fool

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Jeremy Phillips asks Austin Smith to outline Smith’s “Warren Buffett Roadmap.” Smith begins by saying that he’ll only invest in companies for which the window of buying opportunity is short. This strategy forces him to buy companies that he’ll be happy holding for the long run. These tend to be companies with pricing power.

Above all, Smith says that brands matter. They allow companies to pass on price increases in good times and bad. Companies such as Coca-Cola , Philip Morris , and Unilever have this ability.

If you follow this rule, you’ll identify the best-performing stock of the last 50 years. The company? Altria , which boasts a chart that’s basically linear. Altria’s products haven’t changed much, but their brands have remained solid. Needless to say, the company has phenomenal pricing power.

Are you looking for the next Altria? Do you have the patience to hold a stock for 50 years?

If you’re looking for some long-term investing ideas, you’re invited to check out The Motley Fool’s brand-new special report, “The 3 Dow Stocks Dividend Investors Need.” It’s absolutely free, so simply click here now and get your copy today.

The article This Buffett Rule Uncovers the Best-Performing Stock of the Last Half-Century originally appeared on Fool.com.


Austin Smith owns shares of Unilever, Coca-Cola, and Philip Morris International. Jeremy Phillips has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Unilever. The Motley Fool owns shares of Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance

1 Weird Trick to Become a Buffett Investor

By Jeremy Phillips and Austin Smith, The Motley Fool

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Austin Smith talks to Jeremy Phillips about one weird trick investors can use to emulate Warren Buffett.

Phillips reminds us that Buffett has said that people should invest as if the market were only open for one day every five years. Phillips advises investors to work toward buying stocks only one day, or maybe one week, per year, spending the remaining 51 weeks on research.

Asked for his opinion, Smith chimes in and says he loves this idea, which forces investors to think before they act and to buy for the long run. He admits, however, that this method may result in buying a great company at a slightly overvalued price, but he feels doing so is still a good move for the long term.

Phillips goes on to tell us that Zynga and Groupon won’t work with this strategy, because their businesses are changing rapidly. In contrast, Colgate-Palmolive does work using this model. Occupying an “extreme position of strength,” it’s been paying a dividend since 1895, and increasing it for the last 40+ years.

Saying that Colgate is one of his favorite personal investments, Smith adds Unilever  and Philip Morris to the mix, pitching them as companies that help him sleep well at night. He says they make sense for the same reason that Colgate does.

In short, Smith reminds investors to evaluate companies as companies, and not as moving stock prices. If there’s one lesson to learn, it’s this: Be patient.

Now, are you looking for more Buffett-esque ideas?

The Motley Fool’s chief investment officer has selected his own Buffett stock stock for this year. Find out which stock it is in the brand-new free repor “The Motley Fool’s Top Stock for 2013.” Just click here to access the report and find out the name of this under-the-radar company.

The article 1 Weird Trick to Become a Buffett Investor originally appeared on Fool.com.


Austin Smith owns shares of Unilever, Philip Morris International, Colgate-Palmolive, Colgate-Palmolive, and Colgate-Palmolive. Jeremy Phillips owns shares of Colgate-Palmolive. The Motley Fool recommends Unilever. The Motley Fool owns shares of Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance

Is Philip Morris International Destined for Greatness?

By Alex Planes, The Motley Fool

PM Total Return Price Chart

Filed under:

Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Philip Morris International fit the bill? Let’s look at what its recent results tell us about its potential for future gains.

What we’re looking for
The graphs you’re about to see tell Philip Morris‘ story, and we’ll be grading the quality of that story in several ways:

  • Growth: are profits, margins, and free cash flow all increasing?
  • Valuation: is share price growing in line with earnings per share?
  • Opportunities: is return on equity increasing while debt to equity declines?
  • Dividends: are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let’s look at Philip Morris‘ key statistics:

PM Total Return Price data by YCharts.

Passing Criteria

3-Year* Change 

Grade

Revenue growth > 30%

24.7%

Fail

Improving profit margin

17.9%

Pass

Free cash flow growth > Net income growth

16.7% vs. 38.0%

Fail

Improving EPS

59.6%

Pass

Stock growth (+ 15%) < EPS growth

114.0% vs. 59.6%

Fail

Improving return on equity

Negative Equity 

Fail

Declining debt to equity

Negative Equity

Fail

Dividend growth > 25%

46.6% 

Pass

Free cash flow payout ratio < 50%

64.6%

Fail

Source: YCharts.
*Period begins at end of Q4 2009.

How we got here and where we’re going
Despite frequent mentions as the best tobacco stock on the market, Philip Morris manages only three out of nine possible passing grades. This is a problem shared by its American counterpart, Altria , which earned only two passing grades when it went through the same examination. In fact, smaller domestic tobacco stocks Reynolds American and Lorillard both seemed to be better on a fundamental basis late last year than these two halves of the longtime Philip Morris empire.

Philip Morris carries a much larger debt load (nearly $23 billion) than Altria, and this number has been steadily rising in recent years — since Philip Morris‘ spinoff, its debt load has grown 200%. That’s actually better than the growth in Altria’s debt, which is up nearly 600% over the same time frame. The cost of maintaining a high dividend yield can undermine a company’s long-term financial health, but Philip Morris has some wiggle room, should it decide that it’s time to pay down its obligations.

Philip Morris does enjoy some opportunities that its American peers don’t, but it also faces some drawbacks in countries that are even more progressive on anti-tobacco legislation than the United States. For example, Australia has mandated the elimination of packaging graphics, which eliminated Philip Morris‘ brand strength in that country. Russia is also looking into stricter regulations, and other countries may follow in the near future.

Out of the many possible elements of its business that are ultimately out of its hands, one of the most frustrating …read more
Source: FULL ARTICLE at DailyFinance

Profit From Items We All Need to Buy

By Selena Maranjian, The Motley Fool

Filed under:

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you’d like to add some consumer-staple stocks to your portfolio, the Consumer Staples Select Sector SPDR could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The SPDR ETF’s expense ratio — its annual fee — is a very low 0.18 %. It recently yielded 2.8%, too.

This ETF has performed well, beating the world market over the past three, five, and 10 years. As with most investments, of course, we can’t expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why consumer staples?
By definition, staples are items that we tend to buy no matter what the economy is doing. That makes companies making or selling staples attractive, as they add a defensive element to a portfolio, bolstering it in downturns.

More than a handful of consumer-staple companies had solid performances over the past year. Purchases of cigarettes are non-optional to most smokers, as they’re addicted to them, and that helped Altria and Philip Morris International advance 18% and 11%, respectively. (The stocks yield 5.2% and 3.7%, respectively, too.) The latter is a spin-off of the former, focusing on sales outside the U.S., where the growth potential is higher and regulations and restrictions often lower. In the U.S., Altria faces a shrinking base of smokers and various other challenges such as anti-smoking campaigns and a possible ban of menthol cigarettes. Still, it’s been growing.

Philip Morris has a new CEO, and one of its recent promising developments is news that tobacco might be used in flu vaccines. Meanwhile, though, it’s being hurt by a strong dollar but should eventually get a boost from a recovering Europe.

Sysco , leading in the delivery of food products to restaurants and other institutions, gained 18%, for example, and recently yielded 3.3%. The stock is near its 52-week high, despite challenges from weak restaurant traffic and rising food costs, but our improving economy should help. Meanwhile, it’s a dividend titan and has been able to maintain its profit margins while cutting costs. It’s planning to expand internationally, too. Sysco isn’t likely to be a rapid grower, but it can be a relatively steady performer for you.

Mondelez International , spun off from Kraft to focus on the international arena, gained 14%. It’s able to grow faster than its North American counterpart, as many foreign economies are developing and more dynamic than the established first world. The company recently announced plans to buy back up to $1.2 billion worth of shares, though that …read more
Source: FULL ARTICLE at DailyFinance

The Effects of a Strong Dollar

By Rupert Hargreaves, The Motley Fool

Filed under:

There is no doubt that the U.S. dollar is getting stronger. During the week ending March 5, the CFTC reported that net dollar longs reached a seven-month high of $23.57 billion, the largest value since July 17, 2012. This net long position was significantly above the net long position of $14.39 billion reported the previous week. 

In addition, the DXY (the index measuring the U.S. dollar against a basket of currencies) has been in a rising channel since the beginning of 2011 and is on track to surpass its two year high sometime this year.

How does this affect companies?

So how does the strong dollar affect earnings? 

Throughout 2012, the U.S. dollar was strong as the euro crisis drove investors into safe haven assets such as U.S. government securities. In addition, investors were looking for safety in currency as the euro was effectively devalued and it looked like the financial system in Europe was going to collapse. 

According to the DXY index, the dollar was almost 10% stronger in 2012 than in 2011, so how did this affect earnings? 

Philip Morris International (NYSE: PM)

Revenue 2012 2011 Change Including
Currency Translation
Change Excluding
Currency Translation
EU $8,526 $9,212 -7.40% 0.30%
EEMA $8,332 $7,881 5.70% 11.60%
Asia $11,198 $10,705 4.60% 5.70%
Latin America and Canada $3,321 $3,299 0.70% 6.60%
Total $31,377 $31,097 0.90% 5.70%

Figures in millions

Philip Morris has no revenue from inside the U.S., so it has been hit the hardest by a strong dollar. As shown above, the weakness in the euro during 2012 forced the company’s European revenue to contract 7.4%.

Without the weak euro, revenues would have grown 0.3%. Furthermore, revenues in Asia took a hit, growing only 5.7% after the effect of the strong dollar. Excluding the latter, revenues would have grown 11.6%. Overall, the strong dollar removed 4.8% of Philip Morris‘ organic revenue growth and $0.23 from Philip Morris‘ 2012 EPS.

A continuation of dollar strength is going to hit Philip Morris hard, ruling out almost all of its potential revenue growth.

McDonald’s (NYSE: MCD)

  2012 2011

Change Including
Currency Translation

Change Excluding
Currency Translation
Revenues $27,567 $27,006 2% 5%
Operating income $8,604 $8,529 1% 4%
Net income $5,464 $5,503 -1% 3%
Earnings per share – diluted $5.36 $5.27 2% 5%

Figures in millions

McDonald’s did suffer from the strong U.S. dollar but not to the same extent that Philip Morris did. Excluding currency translation, revenues were up 5% for 2012. However, after the inclusion of the currency translation, revenues only gained 2%.

Unfortunately, although net income rose 3% year over year excluding the effects of currency, McDonald’s net income actually fell after translation into U.S. dollar. The strong dollar wiped 4% from McDonald’s net income growth for 2012. 

All in all, foreign currency translation had a negative impact of $0.01 and $0.17, respectively, on …read more
Source: FULL ARTICLE at DailyFinance

Philip Morris International Declares Its First Dividend of 2013

By Eric Volkman, The Motley Fool

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Philip Morris International has declared its latest quarterly dividend, and its first for 2013, and it will be keeping its payout steady. The company will dispense $0.85 per share of its common stock on April 12 to shareholders of record as of March 28. That matches the company’s last two payments, which were handed out in September and December. Before that, the cigarette producer paid $0.77 per share.

The company has been a habitual dividend payer over the past few years, typically raising its disbursement once every four quarters. 

The current dividend annualizes to $3.40 per share. That yields 3.8% at Philip Morris‘ most recent closing stock price of $90.55.

The article Philip Morris International Declares Its First Dividend of 2013 originally appeared on Fool.com.

Fool contributor Eric Volkman has no position in Philip Morris International. The Motley Fool owns shares of Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance

A Close Look at Two Industries That Changed the World

By Alex Planes, The Motley Fool

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On this day in economic and financial history…

Spanish physician Francisco Fernandes became the first known European to introduce tobacco to the Old World on March 5, 1558. Christopher Columbus had known of the plant, and a member of his crew had returned with a small personal supply. However, Fernandes was the first to return with live plants and seeds after a journey to Mexico. Tobacco soon made its way around the continent. A year later, French ambassador Jean Nicot sent a supply of seeds to the French queen, who rewarded him by naming the plant after him: nicotiana, which you should recognize as the linguistic progenitor of nicotine. By the 17th century, tobacco smoking was a fashionable pastime, and demand for its cultivation soon led to the rise of plantation culture in the early American South, particularly in Virginian colonies. Today, American tobacco farming is centered in Kentucky and North Carolina, which together account for 71% of the tobacco grown in the United States.

Today, tobacco is both a hugely successful global industry and a deadly global health problem. The Tobacco Atlas, a joint publication of the American Cancer Society and the World Lung Foundation (no friends of the industry), notes that the industry earned $35 billion in profit and caused nearly 6 million related deaths in 2010, with 1.2 million of those deaths occurring in China. Philip Morris International was the leading manufacturer by volume and the most profitable publicly traded tobacco company in the world that year, but the state-owned China National Tobacco earned more than twice Philip Morris‘ profit on just 35% more revenue. Controlling the monopoly on addiction in a country with more than a billion people can easily create incredibly profit.

Tobacco companies have been under siege in the U.S. for decades as waves of litigation, regulation, and antismoking campaigns have given the industry a black eye. Yet Philip Morris International focuses on overseas markets, where business prospects generally look brighter. Investors have been happy with its stock‘s performance, but is Philip Morris still a buy? Find out in The Motley Fool’s premium research report on the company, which includes in-depth analysis of its opportunities and challenges ahead. To claim your report, along with a year’s worth of analyst updates covering key developments, just click here now.

Traveling the path to profit
Travelers is the result of the merger of two old insurance companies: St. Paul Fire and Marine Insurance and Travelers itself. St. Paul, the elder of the two companies, was founded on March 5, 1853, in the city that gave it its name. There was little competition in the Minnesota Territory (it did not become a state until 1858) when territorial secretary Alexander Wilkin brought 16 other businessmen together to found the company, and in fact there was relatively little risk in the business — it would be two years before …read more
Source: FULL ARTICLE at DailyFinance

Something Big Was Born Today

By Alex Planes, The Motley Fool

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On this day in economic and financial history…

The S&P 500 was created on March 1, 1957, when Standard & Poor’s expanded the “S&P 90” to its present form. Introduced half a year after the dominant Dow Jones Industrial Average updated its components for the first time in 17 years, the S&P resembled a greatly expanded version of that iconic index. At the time, the Dow was still principally an industrial concern — 26 of its 30 components could be classified as “industrials,” or companies whose primary business was making things, compared to 425 industrials out of 500 components in the S&P 500. Half of the S&P’s value was tied to materials and energy stocks within the industrials grouping, and 16 of the Dow’s components were of the same business model. However, despite the similarities between these two indexes of wildly different sizes, the S&P’s diversity has helped it to superior returns: In the 50 years following the S&P 500’s creation, it grew at an annualized rate of 7.2%, compared to 6.7% for the Dow.

Professor Jeremy Siegel and Jeremy Schwartz of WisdomTree Investments dug into the S&P 500’s history to celebrate its 50th anniversary, and these are some of their key findings.

1. Only 6% of the index was made up of tech, health care, and finance in 1957. Today, half the stocks in the S&P 500 can be classified in one of these three categories.

2. Of the original S&P 500 companies, 111 survived intact for 50 years. Of these stocks, 20 outperformed the index’s annual returns by an average of at least 5% per year. A portfolio of the 20 largest companies on the original S&P beat the index by about 1% each year.

3. The best-performing stock from the original S&P 500 is Altria , which provided a 19.9% annual return for the first 50 years of the index. A $1,000 investment in Altria on March 1, 1957 would have grown to $8.4 million 50 years later, but the same investment in the S&P would have returned $168,000 over the same time frame. The second-best stock on the original S&P was Thatcher Glass, which Altria (then Philip Morris) bought in 1988, and which turned $1,000 into about $5 million over 50 years. The Dow missed out on much of these gains, as it only included Altria as a component from 1985 to 2008.

4. Almost 1,000 companies were added to the index over 50 years, but a portfolio of the original S&P 500 companies would have easily beaten the actual index, with all its modifications. Like the Dow, which would have produced far greater gains by simply holding onto its original 30 components, the S&P would have been better if it had never changed.

Altria has been the best-performing stock of the past 50 years, but as the number of smokers in the U.S. continues to steadily …read more
Source: FULL ARTICLE at DailyFinance

Corporate debt: Philip Morris shops benchmark bond sale as maturities loom

By Gayatri Iyer, Contributor

Facing an imminent debt maturity, Philip Morris International is in the market with a public benchmark offering of two-year, floating-rate notes, along with 10- and 30-year fixed-rate tranches, sources said. Active bookrunners for the issue, which has an expected A2/A profile, are Goldman Sachs, HSBC, and Societe Generale, along with passive bookrunners Barclays and Citi. …read more
Source: FULL ARTICLE at Forbes Latest