Wall Street is giddy again and ready to party like it is 1999 after the S&P 500 burst out of the longest bear market in over 70 years last week. Right on cue, the Wall Street cheering financial media and bullish strategists began pounding the table that a new and potentially strong bull market is on its way to glory. The reality is that the economy is slowing, as evidenced by the biggest increase in initial jobless claims last week since October of 2021. In addition, factory orders slumped in April, while the Institute for Supply Management gauge of U.S. services activity showed a big slowdown.
Even more telling is that all the helicopter money from a decade of historical low rates, massive quantitative easing and pandemic handouts is gone, and consumers are starting to load their purchases up on credit cards that have very high rates if you hold any balance. Top economist David Rosenberg warned over the weekend that the recent rally is unfounded and the economy is almost guaranteed to crack into recession later this year.
What should investors do now? With the futures suggesting the Federal Reserve may pause their rate-hike campaign this week, which surely will send stocks higher, take profits on the strength and move the winnings to high-yielding money markets and use the original capital to buy stocks that pay huge and dependable dividends.
Seven top Buy-rated companies look like incredible ideas now and investors are wise to remember the Wall Street adage that “Nobody ever went broke taking a profit.” It is important to remember, though, that no single analyst report should be used as a sole basis for any buying or selling decision.
Altria
This maker of tobacco products offers value investors a great entry point now as it has been hit as cigarette sales have slowed. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro.
Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer, which some feel is worth more than $10 billion and may be a segment of the company that could be sold. Altria posted solid first-quarter results and announced a very shareholder friendly $1 billion stock buyback plan last year.
Shareholders receive an 8.35% dividend. Stifel has a $52 target price on Altria stock, and the consensus target is $49.21. The shares closed on Friday at $45.22 apiece.
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