In a sliding market, Altria has defied the odds, trading up to $58.30 per share. Its 18.8% gain since October 2024 has outpaced the S&P 500’s 10.7% drop. This run-up might have investors contemplating their next move.

Is now still a good time to buy MO? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.

Why Does Altria Spark Debate?

Best known for its Marlboro brand of cigarettes, Altria (NYSE:MO) offers tobacco and nicotine products.

Two Things to Like:

1. Elite Gross Margin Powers Best-In-Class Business Model

All else equal, we prefer higher gross margins because they make it easier to generate more operating profits and indicate that a company commands pricing power by offering more differentiated products.

Altria has best-in-class unit economics for a consumer staples company, enabling it to invest in areas such as marketing and talent to grow its brand. As you can see below, it averaged an elite 69.9% gross margin over the last two years. That means for every $100 in revenue, only $30.06 went towards paying for raw materials, production of goods, transportation, and distribution.

2. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Altria has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the consumer staples sector, averaging an eye-popping 43.2% over the last two years.

One Reason to be Careful:

Revenue Spiraling Downwards

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last three years, Altria’s demand was weak and its revenue declined by 1.1% per year. This wasn’t a great result, but there are still things to like about Altria.

Final Judgment

Altria’s positive characteristics outweigh the negatives, and with its shares outperforming the market lately, the stock trades at 10.8× forward price-to-earnings (or $58.30 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More Than Altria

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.