Shares of cigarette manufacturer Philip Morris International (NYSE:PM) hit a new 52-week high of $103.16 on Jul 8. The company recorded a solid year-to-date return of 17.27%. The stock price appreciation reflects investors’ confidence on the company’s growth potential.
What’s Behind the Rally?
Given the market uncertainty following Brexit, more and more investors are resorting to safe bets like gold and bond. As a result, bond price has risen significantly and in turn resulting in lower yields. Consequently, investors are looking for high dividend paying stock. Hence, a stock like Philip Morris, which has a dividend yield over 4%, offers some respite to these jittery investors.
Further, the tobacco sector seems to be a relatively safe for investors at present. Generally, companies like Philip Morris benefit from the addictive nature of their products. Additionally, lower gas prices and an improving job scenario have increased consumer spending power, which is increasing profitability for these stocks.
Philip Morris is scheduled to report its second-quarter fiscal 2016 on Jul 19, 2016.
Zacks Rank & Stocks to Consider
Philip Morris carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the tobacco sector include Altria Group Inc. (NYSE:MO) and Reynolds American Inc. (NYSE:RAI) with a Zacks Rank #2 (Buy). Another stock in the consumer staples sector worth considering is Tyson Foods Inc. (NYSE:TSN) . Tyson Foods carries a Zacks Rank #2 (Buy) as well.
TYSON FOODS A (TSN): Free Stock Analysis Report
ALTRIA GROUP (MO): Free Stock Analysis Report
PHILIP MORRIS (PM): Free Stock Analysis Report
REYNOLDS AMER (RAI): Free Stock Analysis Report
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