With the continuous "eagle voice" of the Federal Reserve, supply chain disruptions and energy crisis superimposed inflationary pressure, US technology stocks have been generally sold off this year.$Philip Morris International Inc (PM.US) $But rose against the market, standing above the $100 mark, up more than 10% this year, vastly outperforming the s & p 500.

Philip Morris International Inc announced on Wednesday that its subsidiary Philip Morris International Inc Holdings Holdings has reported to$SWEDISH MATCH AB UNSP ADS EACH REP 1 ORD SHS (SWMAY.US) $Shareholders issued a cash offer of SEK 106 per share, involving a total amount of SEK 161.2 billion, or about $16 billion.The acquisition will be the largest since the beginning of last year and at least the fifth largest in history.

The acquisition of Swedish matches will be an important part of Philip Morris International Inc's plan to reduce his reliance on traditional cigarette sales. The deal will expand Philip Morris International Inc's smokeless nicotine business.

According to Professor Jeremy Siegel of the Wharton School of Business,From 1957 to 2003Among the original companies in the S & P 500 indexPhilip Morris International Inc is the best "survivor". The annual return on investing in it is as high as 19.75%. It is known as "the number one bull stock in American stocks".Coca-Cola Company ranked sixth with an annual rate of return of 16.02%.

So, what kind of company is this?

Philip Morris International Inc, the largest tobacco company in the world

Philip Morris International Inc International Company is a large multinational company, which is not only the largest tobacco manufacturer in the world, but also the second largest food manufacturer in the world.其Marlboro, its tobacco brand, ranks first in global sales and Lakers M ranks third in global sales.

Since the 1970s, the United States Congress has gradually strengthened its control over tobacco and banned tobacco companies from promoting their products through the media. PMI is keenly aware of the potential threats to product sales and tries to enter new markets to increase the diversity of its product portfolio. Philip Morris International through the acquisition of Miller Brewery, General Foods and other companiesEnter the beer, food and other industries.

At present, the company is leading the transformation of the tobacco industry, launching "heating not burning" IQOS ILUMA products.Promote the development of smoke-free businessMove further to a more sustainable business. IQOS is a new type of heated non-combustible tobacco product, which is different from the traditional e-cigarette, which uses the heating non-burning mode to reduce the harm of tobacco to human body. )

Second, holding the super pricing power and price raising power of the industry.

Many investors are surprised and confused that Philip Morris International Inc, a tobacco company, has become the best investment target in history. after all, the company belongs to the low-growth tobacco industry. and government regulations, legal restrictions and consumer lawsuits have cost the company tens of billions of dollars.

Consumer goods such as tea, coffee and sugar are addictions to a certain extent.Consumers' long-term consumption will form a hobby, resulting in repeated consumption and long-term consumption habits, so these industries are also the places to produce long-term bull stocks and large market capitalization companies.

According to Anxin Securities Research, from an industrial point of view, this is a good business. Tobacco belongs to an oligopoly industry, the first three or four enterprises basically control this industry, and the barriers to entry are high.And consumers have high brand awareness and strong stickiness, and enterprises have high pricing power. therefore,The pricing power held by tobacco enterprises is a sharp weapon to promote the stable growth of profits.

In addition, there is a view that Philip Morris International Inc's natural moat from tobacco companies is "addictive", although the smoking rate in the United States has been declining.However, due to a high degree of monopoly can continue to raise prices, net profit has been growing rapidly.Peter Lynch has cited the company as an example: if the price of the product increases by 6%, the cost increases by 4%, and the corporate profit margin increases by 2%, it may not seem eye-catching, but if the company's profit margin is 10%, the company's annual earnings will grow by 20% (2%, 10%, 20%).

Third, maintain good performance indicators all the year round: the gross profit margin remains high and the net profit margin shows an increasing trend.

In recent years (except 2020), the company's revenue has continued to grow. For the whole of fiscal year 2021, Philip Morris International Inc's net income was $31.405 billion, an increase of 9.4% over the same period last year, while its mother's net profit was $9.109 billion, an increase of 13.1% over the same period last year. Adjusted diluted earnings per share were $6.08, up 17.6% from a year earlier.

The company's Q1 net revenue was $7.746 billion, up 2.1 per cent from a year earlier and $320 million higher than expected, while net profit was $2.331 billion, down 3.6 per cent from a year earlier, according to the latest results. Adjusted diluted earnings per share were $1.56, higher than market expectations.

Gross profit margin remains high for a long timePhilip Morris International Inc's gross profit margin rose from 63.71% in 2017 to 68.06% in 2021, with a small increase in overall stability.It is worth noting that the company's gross profit margin is higher than that of the company.Coca-Cola Company, the world's largest beverage company, is still tall.

The net interest rate keeps increasing.It increased from 22.06% in 2017 to 30.92% in 2021, which is also basically higher than Coca-Cola Company's performance in the same period.

Fourth, multiple factors drive stock prices up: sustained high levels of dividends and buybacks

The high dividend yield attracts long-term investors. Tobacco companies generally have good cash flow, and money printing presses can provide stable dividends, which is an important reason for the excellent performance of tobacco companies. Since its listing in 2008, Philip Morris International Inc has been increasing its annual dividend every year, with a combined growth rate of 171.7 per cent and an annual compound growth rate of 8.0 per cent.

Philip Morris International Inc has been continuing share buybacks over the years. Notably, last year the company launched a three-year buyback programme of up to $7 billion.

At present, Wall Street analysts give Philip Morris International IncThe average target price is112.00 dollarsWhich means that compared with the latest closing price8%The potential room for growth.

Notably, analysts point out that tobacco stocks should continue to be revalued.Investors need to be sure that the regulatory threat is easing or that profits from smokeless products are rapidly replacing lucrative traditional cigarettes.In this regard, the signs are mixed. The rise in tobacco stocks suggests that investors see it as a safe haven in the face of rising interest rates. This should not be seen as a vote of confidence that the industry's problems are disappearing.