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Tobacco Business and State Economy

Wednesday, January 18th, 2012

cheap plai cigarettes Investors concerned about market volatility due to global uncertainties should pursue businesses with stable, non-discretionary and recession proof business models. Investors can find securities overlooked by Mr. Market in a highly correlated “risk on” and “risk off” world. One of my favorite picks is cash cow Altria Group (MO).

Business Overview: Altria Group engages in the manufacture and sale of cheap Plai cigarettes, smokeless products, and wine. The Company markets cigarettes under the iconic Marlboro brand as well as Virginia Slims, Parliament, Benson & Hedges, Basic, and L&M brands.

Investors are attracted to Altria due to its robust dividend yield of 5.7% and its strong free cash flow generation. Altria remains modestly levered at 2.0x debt to EBITDA. The Company’s free cash flow can be used to boast dividends or buyback stock. Retiring shares will further boast the Company’s EPS.

EBITDA less capital expenditures equated to $6.6 billion in the latest 12 months or $3.17 per share. The Company is generating approximately 11% of its current share price in free cash flow per annum.

While smoking is not a growth business in the developed world, the Company’s brand and durability of cash flow provide for a stable business model. Healthy EBITDA margins of approximately 40% indicate a strong value proposition and strong barriers to entry. Altria should hold up despite a slowdown next year. Smoking is non cyclical and most smokers view it as a non discretionary expense. This is borne out by the stable cash flow and dividends.

While the Company has a very high payout ratio of 84% in the LTM period, the Company operates an exceptionally stable and resilient business model.

Teddy Bears Smoking Pipes at Local Shop

Wednesday, December 21st, 2011

best plai cigarettesTeddy bears, dolls and toys right next to smoking pipes and cheap Plai cigarettes. On Friday, we heard from parents that a store in a Brandon mall was selling the seemingly unrelated items together. It was a store setup parents Aaron and Christi McKeen described that needed to be seen to be believed. Bay News 9 went to the mall to see if the parent’s accusation was true.

We used an iPhone to record exclusive video inside the Urban Cool store in the Brandon mall to show the store was, like the McKeen’s said, selling children’s toys in the front and smoking pipes in the back.

The pipes aren’t being sold illegally, but being sold next to children’s items may come with the surprise to Bay area parents as it did to the McKeen’s.

The items sold in the back of the store are known on the street for smoking illegal drugs like marijuana and crack cocaine.

“Even if it is just for smoking, the kids don’t need to be introduced to that at this age — trying to draw them in with other things,” Aaron McKeen said. “It would be just like having it in the back of a candy store. They don’t need to draw them in with it to get them hooked on those things.”

The parents aren’t necessarily unhappy about the store selling smoking pipes and similar items, they are taking issue with the store selling the items alongside products aimed at children.

“Even if they are like he said smoking pipes it’s still illegal until you’re 18, and that’s not an 18-year-old front end,” Christi McKeen said.

McKeen said her teenage daughter was hooked on the toys in the front of the store.

“My 12-year-old daughter was loving that store she couldn’t wait to go inside,” McKeen said.

The sale of the pipes is something State Rep. Darryl Rouson has been fighting for years.

“We’re doing our best to shut these places down, and expose the hypocrisy and charade,” Rouson said.

A state law passed in 2010 that was meant to restrict and regulate store owners, but owners are suing the state. As a result, the law’s effect has been delayed.

“It’s the store owners who know what these pipes and bongs and utensils are being used for, and the audacity to put them in a toy store where teenagers and young kids can see them,” Rouson said.

After hearing about our report, the owner of the store spoke to Bay News 9 on Friday, saying,” Tell them sorry and they won’t see those things in my store anymore.”

The owner declined to go on camera, but told Bay News 9 he doesn’t do anything illegal. The owner said the items are left over from a flea market store he used to own.

At one point in the interview, the owner said, “Maybe you’re right, it’s not good for children.”

The owner promised to remove the adult-targeted items immediately.