Barron's Thinks Altria (MO) Is A Bargain

In its latest weekly issue, Barron’s feels that US’ largest cigarette maker Altria Group, Inc. (NYSE: MO) has significant appreciation potential. The company lost its fans in the Wall Street when Altria Group sold off its international tobacco operations.

Altria’s spin off - Philip Morris International Inc. (NYSE: PM), which sells the famed Marlboro brand in the international markets, trades at a higher multiple.
However, when compared to its nearest rival in the domestic market, Altria’s costs are high. Barron’s also quoted the prescription of tobacco analyst at Morgan Stanley (NYSE: MS), David Adelman, that could lift the stock.

His three suggestions to Altria’s management: aggressive product pricing, tighter cost cutting and continuation of stock repurchase program.
Altria Group is aware that it has to cut costs. Its current cost cutting strategies have already yielded a savings of $900 million. This could go up to $ 1.5 billion by 2011.