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Mark Yusko: Cigarette Makers To Benefit From Lower Gas Prices

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Mark Yusko: Cigarette Makers To Benefit From Lower Gas Prices

Cigarette makers will post significant gains in the current quarter stemming from lower gas prices, an investment manager told Benzinga Friday.

Altria Group Inc (NYSE: MO), in particular "is going to have a blow-out quarter," said Mark Yusko, the chief executive of Morgan Creek Capital Management.

"Gas prices went down enough so you've got an extra 10 dollars in your pocket at the gas station," Yusko said.

"So you go to the minimart and buy more beer, you buy more cigarettes, you buy Twinkies."

Gasoline prices Friday averaged $2.40 a gallon nationwide, down nearly 34 percent from a year earlier, according to the price-tracking firm GasBuddy.com.

Related Link: Mark Yusko Isn't A Fan Of General Electric's Buyback

Yusko, a former chief investment officer of the endowment of the University of North Carolina at Chapel Hill, said other tobacco companies including Philip Morris International Inc. (NYSE: PM) will also benefit from the trend.

"Selling cigarettes is very very profitable, good long-term business," Yusko said "It's counter-cyclical and all kinds of good things."

Analysts on average expect Altria to post first-quarter earnings growth of 8.8 percent to $0.62 a share.

The company, which has a reported 47 percent market share and owns the Marlboro brand, has missed expectations in two of the past four reporting periods.

Posted-In: Mark Yusko Morgan Creek Capital ManagementAnalyst Color Exclusives Trading Ideas Best of Benzinga

 

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