3 Omicron Stocks: Philip Morris, Raytheon & Unilever

(Free on Substack) Portfolio Strategy (PM US, RTX US, ULVR LN)

A version of this was also published on my Twitter account.

Introduction: Following the discovery of the Omicron variant last week and the reintroduction of COVID-related restrictions in key countries, investor uncertainties have increased again. We highlight three stocks in our coverage that have been particularly affected: Philip Morris, Raytheon Technologies and Unilever.

The first two are clear “bargains”, being businesses with strong structural fundamentals and growing strongly before COVID-19; Unilever is more of a “puzzle”, as it was in a turnaround before the pandemic and is now more expensive than the first two on some measures.

Omicron Bargain: Philip Morris

Philip Morris (“PM”) shares are down 18% from peak, and down 1% pre-market.

PM is a global tobacco company that controls the #1 cigarette brand (Marlboro) outside the US, as well as the #1 product in Heat Not Burn (IQOS).

COVID-19 has been negative for PM. Pre-pandemic, PM had approx. 35% of its EBIT from Emerging Markets, as…