MO Ain't Just Blowing Smoke
This “is among the most treacherous markets I have ever seen in 29 years of trading,” Cramer told viewers Wednesday night.
At this point, the Fed is irrelevant, he said. Even if the central bank moved to cut rates aggressively, “there’s so much damage done that Bernanke may have missed his chance.”
So the only way to survive is to “get defensive and stay defensive.” Investors should be looking for companies with good dividends, share buybacks and catalysts that can drive their stocks higher.
Cramer fave Altria seems to have all that. And MO is up 11% since the market peaked back in October, while the Dow is down 11% over the same amount of time.
What’s exciting, though, is that Cramer said Altria should announce its break-up plans in two weeks. The split into Philip Morris International and Philip Morris USA has been expected, but Cramer’s prediction is that it could happen as early as this quarter. That will leave a fast-growing international stock and a slower domestic growth company with a nice dividend.
Even better is the potential for Altria to announce plans for its almost 29% stake in SABMiller when the break-up news hits the wires. Giving SABMiller a comparable value to Molson, Altria’s holdings are worth about $13 billion. The cigarette maker could put that money to work in a number of different, value-enhancing ways: a buyback, acquisitions, maybe even a special dividend for shareholders.
Best of all for Homegamers: Nobody but Cramer seems to be paying attention to this SABMiller investment. He recommends buying some MO before the announcement because the stock could pop 12 points to $90 if his predictions come true.
Jim's charitable trust owns Altria.
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