UBS’ Bottom Quant Stocks In AI, IT, Healthcare & Others: 29 Stocks In All Sectors

10. Altria Group, Inc. (NYSE:MO)

Number of Hedge Fund Investors In Q2 2024: 36

Sector: Consumer Staples

Altria Group, Inc. (NYSE:MO) is one of the biggest tobacco companies in the world. It is known primarily for its Marlboro brand of cigarettes and has a worldwide presence. Altria Group, Inc. (NYSE:MO) benefits from the fact that its products are often hard to quit, meaning that it enjoys a stable demand even when consumer budgets are tight. At the same time, the firm has been losing market share in the US, where it faces off with equally sizable competitors such as British American Tobacco. Like Brown Forman, Altria Group, Inc. (NYSE:MO) has also struggled with its pricey cigarette brands in a tight consumer spending environment. Yet, the firm might be in line for sizable catalysts in the future as it has established a robust portfolio of nicotine pouches and e-cigarettes, which are popular among younger users and as alternatives to cigarettes. These also helped Altria Group, Inc. (NYSE:MO) in its fiscal third quarter when flavored vape shipments grew by a whopping 100% annually. However, its premium e-cigarette NJOY is being sued by Juul and could create trouble in the future.

Altria Group, Inc. (NYSE:MO)’s management commented on its pouches and e-cigarettes during the Q3 2024 earnings call:

“In the third quarter, NJOY pulled back on certain retail promotional offers to better understand consumer retention and underlying demand. Initial retention results were promising in the retail accounts where NJOY conducted tests. The promotion drove increased volume by approximately 85% compared to the pre-promotion period, and NJOY retained more than half of that volume growth following the promotional period. We believe these results reflect consumer interest in NJOY and their satisfaction after trying the brand and NJOY plans to continue testing trial focused investments with a view toward long-term profitability.

NJOY’s brand equity investments supporting its more to simply enjoy [ph] campaign are also yielding positive results today. NJOY’s, Net Promoter Score, which measures consumer loyalty and satisfaction is over 20 points higher than in 2023. We believe this improvement is attributable to product satisfaction, improved visibility and positioning at retail, and the marketing activations the brand has deployed this year. Turning to marketplace performance. NJOY consumables shipment volume grew more than 15% to 10.4 million units. In the third quarter, consumable shipment volume for the first nine months was approximately 34 million units. NJOY device shipment volume for the quarter nearly tripled versus the prior year to 1.1 million units and was 3.9 million units for the first nine months.

NJOY’s third quarter retail share of consumables was 6.2 share points, up 2.8 share points versus the year ago period and 0.8 share points sequentially.”