5 Best Value Stocks to Buy in 2023 According to Billionaire Mario Gabelli

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

Stake Value of GAMCO Investors: $2,282,458

Number of Hedge Fund Holders: 55

Philip Morris International Inc. (NYSE:PM), the American tobacco giant, was one of the newest additions in Mario Gabelli’s hedge fund. The billionaire purchased 23,470 shares of the company worth $2.28 million as of March end, making it one of the top value plays in his Q1 2023 portfolio. 

On April 13, Stifel resumed coverage of Philip Morris International Inc. (NYSE:PM) with a Buy rating and a $114 price target. The analyst considers Philip Morris International Inc. (NYSE:PM) to be one of the top investment opportunities within the industry, citing its potential for “exceptional growth” compared to other companies in the tobacco and consumer staples sectors.

According to Insider Monkey’s first quarter database, 55 hedge funds were long Philip Morris International Inc. (NYSE:PM), compared to 47 funds in the last quarter. Rajiv Jain’s GQG Partners is the largest stakeholder of the company, with 21.5 million shares worth over $2 billion.

Artisan Value Income Fund made the following comment about Philip Morris International Inc. (NYSE:PM) in its Q4 2022 investor letter:

“Our top individual contributors were Philip Morris International Inc. (NYSE:PM), EOG Resources and Merck. Despite being US-based, tobacco company PM derives all its sales from outside the US. As a result, foreign exchange impacts can be an important driver of near-term returns, and the recent weakening in the US dollar should provide a strong tailwind for earnings due to translation effects. However, our investment case is not tied to currency movements. By virtue of its globally known brands, PM is the best-in-class operator with a well-diversified business, particularly by geography. We believe its next generation heat-not-burn product IQOS should gain share as consumers continue migrating to safer tobacco delivery systems. The company is progressing toward its acquisition of Swedish Match, a Swedish tobacco and nicotine products maker, which was previously held in the portfolio. The deal is a good fit for PM as it reduces PM’s dependence on cigarettes—a category in steady decline—and accelerates the company’s transition to smokeless “reduced-risk” products (RRPs)—a category that has experienced rapid growth over the past five years. PM can also leverage its global scale to generate significant revenue synergies from these complementary product sets, as well as quickly gain access to the US market—the world’s largest market for RRPs and one where regulators have embraced RRPs and other less harmful nicotine products. Looking at PM through our margin-of-safety criteria, the business trades for an undemanding valuation and has extraordinary business economics and a strong credit profile.”