Altria Group, Inc. (MO): A Bull Case Theory

We came across a bullish thesis on Altria Group, Inc. (MO) on Recital’s Substack by Anthony Yu. In this article, we will summarize the bulls’ thesis on MO. Altria Group, Inc. (MO)’s share was trading at $59.65 as of 3^rd July. MO’s trailing and forward P/E were 10.01 and 11.12 respectively according to Yahoo Finance.

Altria’s Q1 2025 earnings call left investors with more questions than comfort, particularly regarding the underperformance of its smoke-free asset NJOY. The tone from management—calm and composed—suggested resignation rather than urgency, frustrating some observers who expected more accountability or strategic action.

While the company appeared focused on avoiding legal or reputational fallout, the contrast to the bold, founder-led ethos of figures like James Buchanan Duke was stark. A visionary like Duke, with skin in the game, might have responded to NJOY’s struggles with aggressive pivots, operational overhauls, and clear accountability, not risk-averse communications.

Altria, constrained by its public company status and U.S. legal landscape, faces inherent disadvantages competing against globally aggressive players, especially those from China with fewer regulatory constraints and no shareholder oversight. The challenge extends to the modern oral tobacco category as well—success with On! may prove fleeting if it simply cannibalizes traditional oral volume without pricing power.

With Zyn gaining share and flooding shelves, raising On!’s prices risks further erosion. Tariffs on Chinese imports, touted as a potential win, may also prove ineffective, as manufacturers adapt through transshipment or relocation, such as Geekvape’s Indonesian plant.

Despite these challenges, Altria remains buoyed by the Marlboro brand’s resilient cash flows and tailwinds from reduced MSA payments, but questions linger over how long it can offset revenue declines and fund OCI growth. At 9x earnings with a 7% dividend yield, the stock offers income and stability, but whether it fully reflects execution risk and future uncertainty is less clear.

Previously we covered a bullish thesis on British American Tobacco p.l.c. (BTI) by Judah Kang in June 2025, which highlighted the company’s transition toward reduced-risk products, its ESG leadership, and a sustainable 7.4% dividend yield underpinned by strong free cash flow. The company’s stock price has appreciated approximately by 16% since our coverage. This is because the thesis played out with market recognition of BTI’s cash generation and credible nicotine transition strategy. This is because the long-term narrative remains intact despite regulatory headwinds. Anthony Yu shares a contrarian view but emphasizes the strategic inertia and competitive pressures facing Altria, raising questions about the durability of its smoke-free pivot.

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Disclosure: None. This article was originally published at Insider Monkey.