MO is still very undervalued at $91Bn ($49.42) as they should be making about $8.5Bn/yr.
| Year End 31st Dec | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | TTM | 2021E | 2022E | CAGR / Avg |
|---|---|---|---|---|---|---|---|---|---|---|
|
$m
|
25,434 | 25,744 | 25,576 | 25,364 | 25,110 | 26,153 | 25,830 | 21,239 | 21,637 | 0.559% |
|
$m
|
8,138 | 21,780 | 10,029 | 9,082 | 255 | 8,133 | 8,046 | -0.012% | ||
|
$m
|
5,241 | 14,239 | 10,222 | 6,963 | -1,293 | 4,467 | 4,339 | 8,495 | 8,809 | -3.15% |
|
$
|
2.67 | 7.28 | 3.56 | 3.78 | -0.651 | 2.41 | 2.34 | -2.00% | ||
|
$
|
2.84 | 3.02 | 3.46 | 4.08 | 2.98 | 3.71 | 3.71 | 4.60 | 4.84 | 5.51% |
|
%
|
+9.65 | +6.40 | +14.6 | +18.1 | -27.1 | +24.6 | +13.9 | +24.1 | +5.22 | |
|
x
|
13.3 | 13.3 | 10.7 | 10.2 | ||||||
|
|
0.551 | 0.550 | 2.05 | 1.72 | ||||||
The issues they had with Juul are fading away and Federally legal marijuana can send this company flying:
Altria likely to see only upside as Juul trial with FTC set to start this week, analyst says
Bill to legalize marijuana on federal level introduced in House
In the Dividend Portfolio, we have the following MO trade:
| MO | Altria Group Inc. | 500 | 11/8/2019 | 571 | $23,100 | $46.20 | $3.15 | $41.10 | $49.36 | $0.14 | $1,578 | 6.8% | $24,678 | ||
| MO Short Call | 2022 21-JAN 47.50 CALL [MO @ $49.36 $0.14] | -5 | 11/8/2019 | (234) | $-2,850 | $5.70 | $-2.00 | $3.70 | $0.03 | $1,000 | 35.1% | $-1,850 | |||
| MO Short Put | 2022 21-JAN 40.00 PUT [MO @ $49.36 $0.14] | -5 | 11/8/2019 | (234) | $-3,000 | $6.00 | $-4.80 | $1.20 | $0.02 | $2,400 | 80.0% | $-600 |
MO pays out $3.44 in dividends, which is a whopping 7% and, at the current net $44.46 on our spread, that's 7.7% annually and, if we get called away at $47.50 in 2022, that's another $3 in profit – about 6% more.
We don't have MO in the LTP, so let's add them there:
- Sell 20 MO 2023 $45 puts for $5.15 ($10,300)
- Buy 30 MO 2023 $45 calls for $6.20 ($18,600)
- Sell 30 MO 2023 $55 calls for $2.60 ($7,800)
That's net $500 on the $30,000 spread that's $12,000 in the money to start. Worst case is owning 2,000 shares of MO at $45(ish) and, when we think MO is toppy, we'll be able to sell some short calls like 10 July $50s which are now 0.75 ($750) and that can generate some nice income while we wait. Will it keep up with the dividend of $10,320 we'd get for holding the stock for 598 days? Well July is 45 days so we'd have 13 x $750 = $9,750, which is close and $29,500 (5,900%) profit potential very much makes up for our missing dividend potential, right?
Selling the short calls in a PM account would cost about $7,200 in margin so very worthwhile to do that vs. buying the stocks as you don't have to tie up $90,000 or $45,000 in ordinary buying power to make it work. Either way though, it's a very solid trade.
