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Non-Tech : Philip Morris - A Stock For Wealth Or Poverty (MO) -- Ignore unavailable to you. Want to Upgrade?

To: francisco figueiredo who wrote (1732)	6/7/1998 12:07:00 AM
From: Ian@SI	Read Replies (1) \| Respond to of 6439

Even Barron's seems to like MO. Extract from story follows. Philip Morris rose 2 3/8 to 38 3/8 Friday in its best gain of the year, after Senate Majority Leader Trent Lott said the Draconian tobacco bill seems dead. The cigarette stocks have been among the weakest industry groups this year because of concerns about tough federal legislation. It remains to be seen, however, whether Friday's gain is an isolated event or the start of a trend. Bulls like Sanford Bernstein analyst Gary Black say Philip Morris could hit 60 in the next year. Philip Morris is still down 15% this year, the worst showing in the Dow. It has a price/earnings ratio of just 11, based on projected 1998 profits, and a dividend yield of over 4%. It's certainly had its share of bad news, more of which came after the close Friday, when it announced that it would set up a $105 million fund to benefit shareholders who had bought its stock from June 11, 1991, through May 6, 1994. The move was made to settle a suit in which some stockholders had accused the company of making misleading statements about cigarettes' addictive qualities. In any case, it's amazing that Philip Morris and Coca-Cola once were viewed as comparable companies because of similar profit growth, but Coke now trades at over 50 times projected 1998 profits, nearly five times the multiple of Big Mo. Sentiment is terrible on the cigarette stocks, and portfolio chiefs feel pressure to sell them. "It's gotten to be a no-win situation, personally and professionally, for many money managers to own the stocks given the public perception of the cigarette industry," said Robert Sanborn, manager of the Oakmark fund. Oakmark has maintained a big stake in Philip Morris, but other managers, including Fidelity, have been selling it. When it gets to the point that the pros are embarrassed to hold a stock, it may be time to buy. The key Street tobacco analyst now is Goldman Sachs's Marc Cohen, who has been correctly bearish. He wrote recently that he saw a "positive glimmer" for the stocks in Washington, but still rates them as "market performers." Should he ever upgrade the shares, they could rally.