Blue-chip stocks seem to be recent favorites in the Alpha Algorithm. This week, Altria Group, Inc. (MO) emerged in seven of the strategies I track.
Founded in 1919 as part of Philip Morris & Co., Ltd., and headquartered in Richmond, Virginia, Altria Group, Inc., manufactures and sells cigarettes, smokeless products and wine in the United States. It also provides finance leasing services primarily in the aircraft, railcar, electric power, real estate and manufacturing industries.
Altria Group, Inc. (MO) vs. the S&P 500 YTD
Seven Top Investment Strategies Betting on Altria Group, Inc. (MO)
1. Large-Cap Growth
The stock is among the top 50 large-capitalization U.S. growth stocks generated through a rigorous 10-factor fundamental screening process.
2. Momentum Factor
The stock also is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which has historically driven a significant part of the companies’ risk and return
3. Large-Cap Alpha
The stock is selected as part of a strategy that aims to outperform the S&P 500 by classifying securities as either growth, value, or both, discarding the lowest-scoring 25%, then weighting the strategy toward the top-ranked stocks.
4. Dividend Dog
One of the five highest-yielding stocks among each of the 10 sectors tracked in the S&P 500.
5. High Quality Stock
The stock exhibits positive fundamentals, including high return on equity, stable year-over-year earnings growth and low financial leverage.
6. Insider Buying
Corporate officers, directors and shareholders own more than 5% of each company’s stock and are accumulating it.
7. Float Shrink
The company has reduced its shares outstanding over the prior 120 days while meeting criteria for shareholder friendliness, profitability measured by free cash flow and leverage ratio.
Buy Altria Group, Inc. (MO) at market today. Place your initial stop at $60.
With the stock technically overbought on the short term, I am holding off on recommending options this week.
With American International Group, Inc. (AIG) bouncing from oversold levels, I recommend you buy the AIG Aug 2016 $55.00 call options (AIG160819C00055000), which last traded at $2.93 and expire on Aug. 19.
Nicholas A. Vardy