10 Best Consumer Staples Stocks To Buy Now

5. Philip Morris International Inc. (NYSE:PM)

Number of Hedge Fund Investors In Q1 2024: 64

Philip Morris International Inc. (NYSE:PM) is a major player in the tobacco industry. This means that the firm is under a lot of pressure to innovate, despite the fact that it commands a 23% share of the global tobacco market. Philip Morris International Inc. (NYSE:PM)’s products are facing a lot of heat because of health risks and from the stunning rise of smoke free tobacco products such as vapes and heated tobacco. As a result, a lot of investor expectations for Philip Morris International Inc. (NYSE:PM) deal with the performance of its heated tobacco business division and its iQOS eCigarette. Like Pepsi and Colgate, a stronger US dollar also harms Philip Morris International Inc. (NYSE:PM) as the firm earns fewer dollars for every unit of products priced in foreign currency that it sells. Therefore, the outlook is clouded for Philip Morris International Inc. (NYSE:PM) as long as the dollar remains strong and it struggles to extract value from non dollar denominated sales. Additionally, the relatively nascent nature of the eCigarette market means that this industry is vulnerable to new regulations and taxes that could dampen growth for iQOS and similar products.

Philip Morris International Inc. (NYSE:PM)’s management commented on these trends during the firm’s Q1 2024 earnings call. Here is what they said:

Our excellent IQOS and ZYN volume momentum, best-in-class pricing, positive category mix and stepped-up cost efficiencies put us on track for a strong 2024, with accelerated top-line growth and margin expansion. Following an exceptional and better-than-expected start to the year, we have raised our full year currency-neutral growth forecasts. Critically, we are also focused on delivering performance in dollars. We are taking measures to mitigate currency headwinds through pricing, accelerated manufacturing productivities and judicious resource allocation to prioritize growth investments. Our 2024 outlook places us firmly on track to deliver our 2024-2026 CAGR targets.

Beyond 2026, we have further exciting opportunities to grow our smoke-free business as we progress towards our ambition of being substantially smoke-free by 2030. Finally and importantly, our strong growth outlook and highly cash generative business underpins our ability to deleverage while maintaining a steadfast commitment to our progressive dividend policy. We look forward to further rewarding our shareholders as our transformation delivers sustainable growth. Thank you and we are now very happy to answer your questions.