Altria(Nyse: mo) It’s not a household name in a consumer sector, but its main brand is probably the one you know. Indeed, his Marlboro cigarette brand has almost 42% stake in the US cigarette market. Add 7.3% of the offering supported by a growing dividend and you can see why investors would be attracted to altric sections. Can investment in the amount of $ 10,000 assist in the status of a millionaire? Maybe, but you need to balance the reward from risk before you jump.
It’s altria Consumer company Because tobacco products often buy consumers, regardless of the market environment. This has something to do with the nature of nicotine, of course, because tobacco, unlike food and personal care items, is not really necessary. The main tobacco product that sells altria is cigarettes.
Picture source: Getty Images.
Cigarette consumers tend to be very loyal, so a huge market share that Altria enjoys with Marlboroom is a great benefit to competition. This was said, Altria only operates in North America. She turned her side of surgery as Philip Morris International(Nyse: pm) A few years ago. So, the entire future of the company mainly rests on its ability to execute in just one region.
So, when you deviate, Altria has one main product with one major brand that operates on only one large market. This is a lot of concentration and should cause a break of most conservative investors. What if something goes wrong with one product with that brand in one market? This could look something like a perennial cigarette drop that leads to the fall of Marlboro’s market share as more competition wider tobacco market.
This is exactly what is happening today with the Altric. The scope of the company cigarette dropped 10.2% in 2024 (Marlbor’s drop was “only” 9%). Marlboro’s market share fell from 42.2% in 2023 to 41.7% in 2024, and Philip Morris International is increasingly competing with altrics in tobacco products that are not in the non-foreign tobacco.
Altria is not ignorant of the very material issues he faces. He tried to bring new products with multiple growth options, including investing in the manufacturer of Vapea Juul and in marijuana companies. Both of these attempts to diversification beyond cigarettes flashes, which led to a billion dollar write -off. Still, he didn’t give up, he recently bought a Maker of Nyoy.
Njoy was further in his development than Juul and investments worked better. For example, Njoy ended in 2024 with an increase in volume of 15.3% in the fourth quarter and a winning of 2.8 percent in a market share to 6.4%. Both numbers were largely launched by the NJOY involvement in their strong and well-established distribution network. But they show the opportunity over the current falls in the cigarette space.
Accordingly, Nyoy is such a small contribution to the company’s revenue and profit that it has not been broken as a separate group of products. And, unusual, Nyoy is in the middle of a patent litigation with Juul. Currently, Njiy is not very good, but Altria says that the company is working on “its solution to products that deals with all disputed patents.”
There is a reason why Altria’s shares are reduced by almost 30% of the highlights they have achieved in 2017. The theory of the big picture is that cigarettes are a dying job. But look at the time strip of strategic moves that Altria has made to deal with this problem. She turned her business and, in that process, she created a new competitor. He invested in two new companies, and none were elaborated. And his latest investment, Nyoy, is doing well, but he found himself in a legal conflict with Juul, which seems like something Altria was supposed to see in view of the previous investment in Juul.
Altria has been around for a long time, and her fundamental job of cigarettes will not disappear at once. So, in some aspects, there is time to work through the difficult period he is currently facing. Indeed, the nature of cigarettes enabled a company to raise prices sufficient for more than compensation for volume and investment in new products. The bigger question is what every strategic move of Altria has done so far seems to have fallen. The company could reverse things, but so far the records of management is not inspiring.
So the Altria and his huge dividend would turn you into a millionaire with an investment of $ 10,000? Re -investing in dividend with a improved execution could do this if you keep long enough. But to paste around a company that, sincerely, made very bad at the moment, will need a lot of faith. And if a business turning point does not happen, investments could be turned into a great disappointment. All in, most investors, and especially conservative, will probably want to look somewhere else.
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Reuben Gregg Brewer There is no position in any of the shares mentioned. Motley Fool recommends Philip Morris International. Motley Fool has disclosure rules.
