The Ultimate Stock For A Recession

Altria Group Inc. is one the biggest producers of cigarettes in America. Now I know some people simply won't buy Atlria because it is a tobacco stock, but if you can get over the guilt of owning a tobacco company, Altria is an excellent company to invest in for 2009. For those of you who don't know, Altria Group is the parent company of Phillip Morris USA, Phillip Morris Capital Corporation, John Middleton, Ste. Michelle Wine Estates, U.S Smokeless Tobacco Company, and has a 28.5% stake in SABMiller (manufactures beer). 

Altira has excellent cash flow, and is the ultimate recession proof stock. During a recession, I am looking for a company that is going to maintain if not grow its earnings and provide a nice dividend. Altria does that. At its current price it has an over 8% yield, putting a good amount of cash into your pocket ever quarter. I say Altria is a recession proof stock because their business, cigarettes and beer, is one thing Americans won't cut down on when they are trying to cutback spending. If anything, people will become stressed out and smoke more. SABMiller has many cheap beers that are still selling in a tough economic time. People won't cut back on beer, they might cut back on expensive beer and buy cheaper ones, which SABMiller offers.

Altria's management and CEO are excellent. They begun a cost cutting measure in 2007, having cut down costs already by $640 Million, and they are planning to cut an additional $860 Million dollars in the coming year. Altria has built a hoard of cash to help it weather the economic storm. Management knows the upcoming year is going to be tough, including higher taxes on tobacco products and has adjusted to face the challenges. Altria has strong brands including Marlboro Black & Mild, Skoal, and Copenhagen, which are all the amongst the most popular tobacco products and have loyal customers.  Altria recently met its earnings expectations and announced that it is expecting higher revenue growth than previously thought for 2009.

Altria has shown its desire to grow as well. Altria recently finished purchasing UST, clearing a lot of debt and giving it a nice balance sheet, that has expanded its business in the tobacco industry. Altria dominates the U.S tobacco industry and will continue to do so. Altria is attractive because it offers an outstanding dividend along, management that has a plan to get through the recession, has recession proof products, and lots of cash. If you are looking for a stock that can give you returns during a down economy, Altria might be it.