Renaissance Technologies’ Stock Picks for 2013 Include Qualcomm

Philip Morris. Renaissance was buying shares of cigarette company Philip Morris International Inc. (NYSE:PM) during the quarter and entered 2013 with 4.7 million shares in its portfolio. The company sells the Philip Morris brands in international markets while Altria Group, Inc. (NYSE:MO) focuses on the United States; the two separated in 2008. Philip Morris pays a dividend yield of almost 4% at current prices, which is lower than some other cigarette companies (including Altria). In theory this is because there are more growth opportunities in developing markets, and earnings growth has in fact been moderate recently. The stock trades at trailing and forward P/Es of 17 and 14, respectively.

Philip Morris and Qualcomm are both priced for at least some growth going forward; between the two, we’d be more interested in doing further research on Qualcomm. While cigarette companies are generally good income investments, we think that Philip Morris’s peers may be better buys in that department. In the case of Microsoft we’re still not ready to make a call based on value and think it’s better to wait for results that reflect the release of Windows 8 and Office 2013.

Disclosure: I own no shares of any stocks mentioned in this article.