In this article, we discuss 5 best hard landing stocks to buy now. If you want to see more stocks in this list, click 10 Best Hard Landing Stocks to Buy Now.
5. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 55
Philip Morris International Inc. (NYSE:PM) is a New York-based tobacco company that manufactures and sells cigarettes and smoke-free products. The recent FDA ruling against Juul is a positive indicator for Philip Morris International Inc. (NYSE:PM), which may have the chance to push IQOS growth with Juul removed from the market. Philip Morris International Inc. (NYSE:PM) has received approval for the IQOS HNB device and its e-cigarette, VEEV.
On April 24, BofA analyst Lisa Lewandowski raised the price target on Philip Morris International Inc. (NYSE:PM) to $117 from $107 and maintained a Buy rating on the shares. Despite headwinds in 2022, the analyst expects Philip Morris International Inc. (NYSE:PM) to shift its attention to different potential markets in order to survive the temporary cost pressures of moving production away from Russia. The analyst also observed that Philip Morris International Inc. (NYSE:PM)’s underlying business is strong and offers upside potential. She also likes the attractive yield, the transition to a smoke-free future, and the company’s focus on higher margin products.
According to Insider Monkey’s Q1 data, 55 hedge funds were bullish on Philip Morris International Inc. (NYSE:PM), up from 47 funds in the previous quarter. Rajiv Jain’s GQG Partners is the largest shareholder of the company, with approximately 30 million shares worth $2.8 billion.
Broyhill Asset Management mentioned Philip Morris International Inc. (NYSE:PM) in its Q2 2021 investor letter. Here is what the firm had to say:
“Philip Morris (PM) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 23%. We shared our thoughts on these regulations during the quarter, which are available here.
‘PM Valuation. PM is up ~ 15% YTD and would have the most to gain under a nicotine cap. A cap would likely accelerate conversion to iQOS, which is 100% incremental for PM (PM also has zero exposure to combustible cigarettes in the U.S. and licenses its IQOS product for MO to distribute domestically). As such, the decline in PM was much more muted, with the stock hitting new 52 week highs a day after the Biden headline, driven by yesterday’s earnings release. It didn’t take long for investors to shift their attention back to fundamentals and the fundamentals here are best in class. In short, results beat estimates across the board (a recurring theme here), and management raised guidance for the full year (another recurring theme). IQOS continued to deliver impressive growth, recording continued market share gains on the heels of continued user acquisition growth, up 1.5M to 19.1M total users. Importantly, IQOS now represents nearly 30% of PM net revenues (management expects “smoke-free” products to represent more than half of their business by 2025, which should make the ESG folks happy), which is driving top-line growth and margin expansion. Hard to believe that they have created a product with higher margins than combustible cigarettes!! We expect PM operating margins to increase by 100bps – 200bps annually as IQOS continues to gain share. The stock trades at ~ 15x today or 2/3 of the market’s multiple for a business likely to generate $35B in cash flow – or 25% of the market cap – in just the next three years. Over the last decade, shares have traded at an average multiple of 18x and within a range of ~ 14x – 22x (+/-1 standard deviation). The stock yields 5.1% at the current price, and we expect management to resume share purchases in the back half of this year.’”
