Librarian Capital's Research Library

Librarian Capital's Research Library

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Librarian Capital's Research Library
Librarian Capital's Research Library
Altria: New U.S. Tax Proposal Would Protect Cigarettes, Buy

Altria: New U.S. Tax Proposal Would Protect Cigarettes, Buy

(Preview) Company Update (MO US) (Buy)

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Librarian Capital
Nov 04, 2021
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Librarian Capital's Research Library
Librarian Capital's Research Library
Altria: New U.S. Tax Proposal Would Protect Cigarettes, Buy
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Summary

  • The latest U.S. budget proposal from House Democrats reinserted the "taxable nicotine" concept but left out other tobacco tax hikes.

  • If passed, it would mean significant tax increases for e-vapor and nicotine pouches, but no change for cigarettes and moist snuff.

  • The proposal would effectively protect U.S. cigarette sales. Altria would be a clear winner, while Swedish Match would be a clear loser.

  • The likelihood of the proposal happening is reduced by Senator Joe Manchin's opposition. This is a low-probability, high-impact risk.

  • We maintain our Buy rating on Altria, with an 8.0% Dividend Yield and a forecasted 21.0% annualized return, and on 3 other tobacco stocks

Introduction

We believe a new U.S. budget proposal released by House Democrats would protect cigarette sales and leave Altria a clear winner.

The U.S. Congress has been locked in budget negotiations for months, largely due to the Senate having just a single-seat Democratic majority (from the Vice President's breaking vote; t…

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