Wednesday, September 27, 2006

Bought Some Altria (MO)

I have been looking to put some cash to work and Monday provided a decent buying opportunity in Altria (MO). I still believe shares are worth $92 if the company spins off Kraft. The speculated deal would be that for each share of Altria you would get 0.70 share of Kraft. The price of Altria would drop, but a 5% dividend yield would keep the stock around the $68 level.

Kraft: 0.7 * Kraft Price Per Share ($34.51 Per Share= 17*2007E) = $24
PMUSA & PMI: = $68 (Maintain a 5% yield $3.44 Dividend)
Altria Dividend might have to be lowered since it will no longer receive a dividend from Kraft.
My conservative value: $24+$68=$92

Note: I am long Altria (MO)


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