Philip Morris - Hurting With Falling Cigarette Sales

Source from:  Tobacco World 04/19/2011

Philip Morris International, Inc. (NYSE: PM) currently yields only 3.9% for investors. This is tiny, but we expect this to rise handily. Philip Morris International , producer of Marlboro cigarettes generates all of its income outside of the United States. the dollar is weaker, many might wonder why the dividend here is not as high as Altria's dividend. The company has not had as many years to accumulate as much cash may be one explanation, and the other explanation may be that it needs to keep using its capital for growth in emerging markets rather than handing it out to shareholders. Trading Philip Morris International (NYSE:PM) closed Monday's unfavorable trading session at $66.83. In the past year, the stock has hit a 52-week low of $42.94 and 52-week high of $67.28. Philip Morris International stock has been showing support around $65.76 and resistance in the $67.82 range. Technical indicators for the stock are Bullish and S&P gives PM a positive 4 STARS (out of 5) buy rating. For a hedged play on this stock, look at the Sep '11 $65.00 covered call for a net debit in the $62.73 area. That is also the break-even stock price for this trade. This covered call has a duration of 158 days, provides 6.13% downside protection and an assigned return rate of 3.62% for an annualized return rate of 8.36% (for comparison purposes only). A lower-cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the PM Jan '12 $55.00 call and selling the Sep '11 $65.00 call for a total debit of $8.50. The trade has a lifespan of 158 days and would provide 4.98% downside protection and an assigned return rate of 17.65% for an annualized return rate of 41% (for comparison purposes only). Philip Morris International has a current annual dividend yield of 3.89%. [THA-Seven Summits Research] 52 Week High Philip Morris International (NYSE: PM) hit a new 52-Week high of $65.47 Friday, finishing the day up $0.60 (0.93%) to $65.12 on 7,093,944 shares traded. Friday's high is up $22.18 from a 52-Week Low of $42.94. Philip Morris International has been showing support around $63.41 and resistance in the $65.29 range. Technical indicators for the stock are bullish and S&P gives PM a positive 4 STARS (out of 5) buy ranking. If you are looking for a hedged play on PM the stock seems like it could be a candidate for a September out-of-the-money bull-put credit spread below the 57.50 range. [ABR-Seven Summits Strategic Investments NewsBite] "The fragility of the economic recovery, particularly with regard to employment levels and currency volatility, naturally warrants a cautious outlook for 2010," said Louis Camilleri, chief executive, in the earnings report. "However, we enjoy solid momentum and remain confident that we will again post strong financial results this year." Enditem