A Truly Smokin’ Opportunity

In a market like this, the best offense is a good defense. Home Gamers should be looking for secular growth stocks, companies that make money no matter how bad the economy is. And there’s nothing more recession-proof than cigarettes. Well, maybe the mafia, but we’re talking stocks here.

There’s a reason Altria is a part of Cramer’s charitable trust – it’s the upside potential from the Kraft spinoff. Now MO is offering “when-issued” shares, called MO-WI, that allow you to buy just the cigarette portion of the company from now until March 30, which is when the split is set to occur. This way you don’t have participate in the spinoff yourself. Cramer has always been a bigger fan of the tobacco side of the business anyway, so this works out perfectly.

The MO-WI shares should start trading in the mid-60s, but some of the Street, Cramer included, say the stock is worth at least somewhere in the mid-70s. The when-issued shares will also have a higher dividend than the old MO to boot. Here’s how it breaks down:

Since Altria owns almost 90 % of Kraft, Kraft subsidizes their dividend. Altria pays out $3.44 a share right now, but that goes to $2.75 a share when you take out Kraft’s contribution. Now remove Kraft’s market cap from Altria, because that’s what these MO-WI when-issued shares do, and you’ve got a $130 billion company with a price of $62 a share. The dividend yield? A whopping 4.4%, up from Altria’s current 4%yield.

The other great thing about these when-issued shares is that you can finally compare Altria’s tobacco business to its competitors – you can compare it to Reynolds . The results are about what you’d expect: MO-WI has a higher multiple, lower dividend and better growth to justify its premium price. Its more expensive than Reynolds, sure, but we pay up for best of breed.

Bottom Line: You can now buy just the smoky part of Altria under MO-WI. Cramer would if he didn’t already have Altria in his charitable trust – and that’s the best thing he could ever say about a stock.

Questions? Comments? madmoney@cnbc.com