Russ Kaplan, Frank Fox Hoagstrom Financial Group, is a leading value investing expert and editor of Heartland Advisor. Here’s a look at his two latest buy recommendations, a global energy stock and a tobacco firm.
French company Total SA (TOT)
Total SA has a market cap of over $123 billion, price to earnings ratio of 17, earnings per share of $2.98, and a debt to equity ratio of 51.18%.
The company plans to increase production by more than 4% this year, aided by field start-ups in Congo, Brazil, and the U.K. This stock may be a good fit for investors looking for income; the current dividend is $2.66 per share or a 5.14% yield.
The energy sector is currently down over 11% for the year, so as a value investor, this stock would fit into our guidelines.
Some risks to our recommendations may include an over-concentration in Africa and the Middle East; possible negative political developments, hindering the ability to access its oil and gas resources; the persistent weakness in oil prices; and tightening refining margins.
Altria Group (MO)
Through its subsidiary companies, Altria also produces smokeless tobacco products and wine.
In addition, it provides finance leasing services primarily in aircraft, electric power, railcar, real estate, and manufacturing industries.
Altria Group was founded in 1919, is headquartered in Richmond, VA, and has 8,300 employees. As of August 9, 2017, they have a market cap of over 125 billion, price to earnings ratio of 21.26, earnings per share of 3.08, and a debt to equity ratio of 1.12.
The dividend for Altria is $2.44 per share which is a 3.72 % yield. This may be a fit for someone looking for income.
Standard and Poor’s reports: “MO is a large-cap company in an industry that we view as operationally very stable. However, the tobacco industry is beset by litigation. The company is subject to several ongoing legal actions, which could have a material impact on future cash flows.”
Investors remain cautious of these actions, as well as tax increases and smoking bans. On July 28, the Food and Drug Administration announced its plan to reduce legal nicotine levels in cigarettes, to make them less addictive. Altria stock dropped nearly 10% intra-day, upon this news.
We feel the stock is currently undervalued, making it our newest value investment recommendation. Altria will likely benefit from its growth in higher-margin smokeless tobacco products.
Russ Kaplan is president of Russ Kaplan Investments.
Subscribe to Russ Kaplan’s Heartland Advisor here…
About MoneyShow.com: Founded in 1981, MoneyShow is a privately held financial media company headquartered in Sarasota, Florida. As a global network of investing and trading education, MoneyShow presents an extensive agenda of live and online events that attract over 75,000 investors, traders and financial advisors around the world.
Read Next
