Altria Group (MO) Stock Headed for Rebound After Being Smoked
Altria Group (MO) has been making headlines again – this time as it discusses a potential investment in or acquisition of Cronos Group (CRON). Cronos is a firm focused heavily on marijuana production, and could be a perfect partner for tobacco giant, Altria.
Formerly known as Philip Morris, Altria is an S&P 100 company that owns such iconic brands as Marlboro cigarettes, Copenhagen dipping tobacco, and Nat Sherman cigars. Needless to say, sales of these products have been declining for decades due to increasingly severe health concerns tied to the use of tobacco products.
As a result, Altria has been actively seeking ways to diversify away from its declining tobacco business and into different, but often related, areas. Case in point, the company was recently reported to have been in talks to invest in Juul, the fast-growing e-cigarette maker. Altria also already owns Nu Mark, which develops and markets e-vapor products. In addition, the company owns a 10% equity investment in Anheuser-Busch InBev (BUD), the maker of Budweiser beer.
As Altria continues to diversify into companies and products that have much greater business potential than tobacco, the company’s prospects could improve dramatically. This should especially be the case if Altria makes any headway with Cronos, Juul, and/or similar partners.
From a technical perspective, MO stock has been attempting to emerge from a deeply oversold plunge to key support levels. The stock began a sharp dive in early November, which bottomed out in late November. Since that tentative bottom, MO has been on the rebound, though the stock fell sharply with the rest of the market on Tuesday.
Oscillators, including both Stochastics and RSI, are just emerging from heavily oversold, and pointing towards a potential recovery of the stock. Overall, the chart above shows the 100-day trend channel as still bullish. And price appears to be bouncing off the lower borders of two linear regression channels.
The Technicals Rating
The Technicals gives MO a bullish rating of 6 (on a scale of 1-10, with ’10’ being the most bullish and ‘1’ being the most bearish). Below are some of the key technicals for MO, as well as other relevant information, that paint a slightly bullish picture of the stock:
- Price Position vs 200-Day SMA: -8.67% (below) – BEARISH
- Position vs 50-Day SMA: -9.93% (below) – BEARISH
- Position vs 20-Day SMA: -5.85% (below) – BEARISH
- 200-Day Trend Slope (Linear Regression): BEARISH
- 100-Day Trend Slope (Linear Regression): BULLISH
- Stochastics (14,3,3) Level: Emerging Up from Oversold – BULLISH
- RSI (14) Level: Emerging Up from Oversold – BULLISH
- Position in Bollinger Bands: Near Lower Band – BULLISH
- Sector (ETF: ACT) Long-Term 200-Day Trend: BULLISH
- Sector (ETF: ACT) Medium-Term 100-Day Trend: BEARISH
- Market (S&P 500) Long-Term 200-Day Trend: BULLISH
- Market (S&P 500) Medium-Term 100-Day Trend: BEARISH
- Short Interest Ratio: 1.17% – BULLISH
- Analysts’ Mean Target Price: $65.82 (far above current price) – BULLISH
- Last Earnings Reaction: Sharp Move Up – BULLISH
Overall The Technicals Rating for MO: TTTTTTTTTT (6 out of 10) – SLIGHTLY BULLISH
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Past performance is not indicative of future results. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don