Market Overview - A recent ruling by the U.S. trade court declared President Trump's global tariffs illegal, contributing to a new wave of market uncertainty [1] - The Federal Reserve's current wait-and-see approach adds to the uncertainty regarding future interest rate directions [1] Investment Strategy - Creating a curated portfolio of low-beta stocks is recommended as a strategy to navigate market volatility [1] - Low-beta stocks are less volatile than the market, providing a safeguard against uncertainty [1] Stock Recommendations - Suggested stocks include Natural Gas Services Group Inc (NGS), Stride Inc. (LRN), AptarGroup Inc. (ATR), and Philip Morris International Inc. (PM) [2] Stock Characteristics - Beta measures the volatility of a stock relative to the market, with a beta of 1 indicating movement in line with the market [3][4] - Stocks with a beta between 0 and 0.6 are screened for lower volatility [5] Screening Criteria - Stocks must have a positive price change over the last four weeks [5] - Average 20-day trading volume should exceed 50,000 to ensure liquidity [6] - Stocks must be priced at $5 or higher [6] - Zacks Rank of 1 indicates strong buy potential, suggesting significant outperformance over the next one to three months [6] Company Insights - **Natural Gas Services (NGS)**: Increased demand for liquefied natural gas (LNG) exports is driving the need for compression equipment, benefiting NGS as more pipelines are built [7] - **AptarGroup (ATR)**: Positioned for growth due to trends in healthcare moving towards home settings and rising demand for drug delivery systems [8] - **Stride Inc. (LRN)**: Focuses on innovative educational solutions, benefiting from the growing demand for school choice and tutoring services [10] - **Philip Morris International (PM)**: Transitioning from traditional cigarettes to smoke-free products, with a focus on shareholder rewards and cost-cutting initiatives [11]

Market Overview - Wall Street has experienced volatility in 2025 due to overstretched valuations of U.S. stocks, persistent inflation, weak economic data, geopolitical conflicts, and concerns regarding the Trump administration's trade policies [1] - The Federal Reserve's uncertainty over rate cuts, recession fears, and the emergence of a low-cost Chinese AI platform have contributed to investor unease [1] Investment Strategy - It is advisable to invest in high dividend-paying corporate giants, which typically possess strong financial positions, robust business models, and globally recognized brand value [2] - Regular dividend payments from these firms can provide a steady income stream during market fluctuations [2] Company Highlights Philip Morris International Inc. (PM) - Zacks Rank 1, benefiting from strong pricing power and an expanding smoke-free product portfolio, aiming to become substantially smoke-free by 2030 [6][7] - Expected revenue and earnings growth rates of 8.1% and 13.7% respectively for the current year, with a current dividend yield of 3.01% [8] CVS Health Corp. (CVS) - Zacks Rank 2, investing in technology to reduce costs and enhance customer experience, with plans to close 271 stores to save over $500 million in 2025 [9][10] - Expected revenue and earnings growth rates of 3.7% and 12.6% respectively for the current year, with a current dividend yield of 4.34% [10] Energy Transfer LP (ET) - Zacks Rank 2, benefiting from long-term fee-based contracts, with nearly 90% of earnings from such contracts [11][13] - Expected revenue and earnings growth rates of 18.2% and 12.5% respectively for the current year, with a current dividend yield of 7.30% [13] GSK plc (GSK) - Zacks Rank 2, strong position in HIV and Vaccines, with increased sales growth in Specialty Medicines and promising new products [14][15] - Expected revenue and earnings growth rates of 5.1% and 6.7% respectively for the current year, with a current dividend yield of 4.28% [16] NatWest Group plc (NWG) - Zacks Rank 1, providing a range of banking and financial services in the UK and internationally [17][18] - Expected revenue and earnings growth rates of 20.1% and 17.3% respectively for the current year, with a current dividend yield of 5.41% [19]

Investment Rating - Industry rating is maintained as "Outperform the Market" [9] Core Insights - The new tobacco market continues to grow, with heated tobacco products leading in market size and nicotine pouches experiencing the fastest growth [2][3] - The global tobacco market is undergoing significant changes, with Japan's tobacco business expanding rapidly [4] - The global supply of tobacco leaves is facing shortages, leading to widespread price increases across the industry [14] Summary by Sections Electronic Cigarettes - In 2024, global e-cigarette sales are projected to reach $23.04 billion, a year-on-year increase of 9.5% [3] - Sales of disposable e-cigarettes grew by 18.9% to 840 million units, generating $6.42 billion in revenue, up 19.6% [3] - Open system e-cigarettes saw sales of 85.16 million devices and 12.23 million liters of e-liquid, with revenues of $2.62 billion and $5.49 billion respectively [3] Traditional Tobacco Products - Traditional oral tobacco products, including chewing and snuff tobacco, are experiencing a decline, with 2024 sales expected to drop by 0.8% to 115,000 tons [3] - Revenue from traditional oral tobacco is projected to decrease by 0.1% to $13.82 billion [3] Nicotine Pouches - Nicotine pouch sales are expected to grow by 36.9% to 21.23 billion pouches in 2024, with revenue reaching $11.25 billion, a 51.0% increase [3] - The United States leads in nicotine pouch sales with 13.88 billion pouches sold [3] Heated Tobacco Products - Sales of heated tobacco products are projected to grow by 12.7% to $38.85 billion in 2024 [3] - The volume of heated tobacco devices sold is expected to increase by 11.7% to 45.26 million units, with revenue rising by 14.7% to $2.44 billion [3] Company Performance - Philip Morris International reported a net income of $14.66 billion from its smoke-free products, a 14.2% increase, accounting for 38.7% of total revenue [5] - British American Tobacco's Vuse e-cigarette sales declined by 5.9% to 616 million units, impacted by illegal disposable e-cigarettes in the U.S. [6] - Japan Tobacco's Ploom brand heated tobacco sales grew by 24.2% to 218,000 boxes, primarily driven by the Ploom X model [7] Market Dynamics - The global tobacco market is experiencing intense competition, with multinational companies showing divergent growth patterns [4] - The supply chain for tobacco is under pressure due to climate-related shortages and rising prices [14]

Core Viewpoint - Philip Morris shares have increased by approximately 3% over the past month, underperforming the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings release [1] Estimates Movement - Estimates for Philip Morris have trended upward over the past month, indicating a positive outlook for the stock [2] VGM Scores - Philip Morris has a subpar Growth Score of D and a Momentum Score of F, with an overall aggregate VGM Score of F, placing it in the bottom 40% for investment strategies [3] Outlook - The upward trend in estimates suggests a promising outlook, and Philip Morris holds a Zacks Rank 1 (Strong Buy), indicating expectations for above-average returns in the coming months [4]

Market Overview - Wall Street experienced a strong bull run in 2023 and 2024, but 2025 has shown mixed results due to concerns over persistent inflation and the Federal Reserve's uncertain stance on interest rates after a 1% cut in the benchmark lending rate last year [1] - Severe volatility has affected Wall Street since early April, primarily due to the implementation of reciprocal tariff policies by the Trump administration, with baseline tariffs at 10% but actual rates exceeding 70% for several major trading partners [2] - Retaliatory tariffs from other countries have raised fears of a global trade war, although some trade negotiations have been settled and others are ongoing [3] Company Highlights Philip Morris International Inc. (PM) - Philip Morris has shown strong pricing power and is expanding its smoke-free product portfolio, aiming to become substantially smoke-free by 2030 [7] - The company anticipates robust growth in 2025, with a projected 2% increase in volume and smoke-free products expected to grow by 12-14% [8] - Expected revenue and earnings growth rates for the current year are 8.1% and 13.7%, respectively, with a stock price increase of 44.7% year to date [9] Sprouts Farmers Market Inc. (SFM) - Sprouts Farmers is focusing on product innovation, e-commerce, and private label offerings, which have contributed to better-than-expected fourth-quarter 2024 results [10] - The company expects net sales to rise between 10.5% and 12.5% in 2025, with comparable sales anticipated to increase by 4.5-6.5% [11] - Expected revenue and earnings growth rates for the current year are 13.7% and 35.5%, respectively, with a stock price surge of 32.2% year to date [12] Newmont Corp. (NEM) - Newmont is progressing with growth projects, including the Tanami expansion and the acquisition of Newcrest, which enhances its portfolio and synergies [13] - The Ahafo North project has received full funding approval, with commercial production expected to start in the second half of 2025, involving an investment of $950 million to $1,050 million [14] - Expected revenue and earnings growth rates for the current year are 2% and 12.6%, respectively, with a stock price increase of 40.5% year to date [15]

Core Viewpoint - Altria Group, Inc. and Philip Morris International Inc. are two leading players in the tobacco industry, with diverging strategies as they transition from traditional tobacco to reduced-risk products (RRPs) [1][2]. Altria Group, Inc. - Altria commands over 40% of the U.S. cigarette market, but faces declining cigarette volumes and reduced pricing power, with net revenues from smokeable products falling 5.8% to $4,622 million in Q1 2025 [5][6]. - The company is focusing on building a smoke-free portfolio, particularly in modern oral nicotine and vapor products, with its on! nicotine pouch seeing an 18% year-over-year growth in shipment volumes [6][7]. - Altria's e-vapor efforts have faced challenges, including the removal of NJOY ACE from the market due to regulatory issues, but the company aims to innovate and develop compliant vapor products [7][8]. - Operating solely in the U.S. presents both advantages and challenges, as regulatory pressures increase, limiting innovation and complicating execution [8]. Philip Morris International Inc. - Philip Morris is leading the global shift towards a smoke-free future, with its IQOS heat-not-burn device gaining traction in markets like Japan and Europe [9][10]. - The company has strengthened its smoke-free product portfolio through the acquisition of Swedish Match, enhancing its position in the oral nicotine segment [10][11]. - In Q1 2025, smoke-free products contributed 42% of total revenues and 44% of gross profit, with a 15% year-over-year revenue increase [11]. - Philip Morris benefits from a global footprint, allowing for better regulatory risk diversification and broader growth opportunities compared to Altria [12]. Financial Performance and Valuation - The Zacks Consensus Estimate for Philip Morris' 2025 EPS has increased by 3.3% to $7.47, indicating a projected growth of 13.7%, while Altria's estimate has risen by 1.3% to $5.35, reflecting a growth of 4.5% [13]. - Philip Morris trades at a forward P/E of 22.20x, while Altria trades at 10.97x, indicating that investors are willing to pay a premium for Philip Morris' growth visibility [14]. - Over the past year, Philip Morris' stock has gained 73.9%, outperforming Altria's 29.6% and the industry's 54.5%, showcasing investor confidence in its growth strategy [16]. Conclusion - Philip Morris stands out with its successful transition to RRPs, global diversification, and stronger earnings growth outlook, while Altria's U.S. market dominance is tempered by regulatory challenges and a slower transition to RRPs [17].

Group 1: Investment Philosophy - Investing is compared to making good BBQ, requiring time and patience for optimal results [1] - The right stocks can create generational wealth over decades [1] Group 2: Company Highlights - **Amazon**: Dominates U.S. e-commerce with approximately 40% market share; growth opportunities in grocery, healthcare, and automotive sales; also a leader in cloud computing [4][5] - **Coca-Cola**: Continues to grow with a diverse product range; 68% of people in emerging markets do not consume commercial beverages, indicating potential for expansion [6][7] - **Realty Income**: A real estate investment trust with a 5.7% dividend yield; has paid and raised dividends for 32 years, providing durable revenue streams [9][11] - **Philip Morris International**: Transitioning to next-generation nicotine products, which now account for 42% of net revenue; expected to continue growth and dividend payments [12][13] - **Take-Two Interactive Software**: A major player in the video game industry with franchises like Grand Theft Auto; the global gaming market projected to reach $257 billion by 2028 [14][16]

Core Insights - Sin stocks, representing companies in industries like alcohol, tobacco, cannabis, and gambling, have consistently outperformed broader markets due to strong cash flows and inelastic demand [2][4][11] Industry Overview - The U.S. alcoholic beverages market is projected to grow from $544.19 billion in 2024 to $709.13 billion by 2029, with a CAGR of 5.4% [8] - The global tobacco market is expected to increase from $921.4 billion in 2024 to $1,198.4 billion by 2035, reflecting a CAGR of 2.3% from 2025 to 2035 [9] - The global online gambling market was valued at $78.66 billion in 2024 and is projected to grow at a CAGR of 11.9% from 2025 to 2030 [10] Company Insights - Molson Coors (TAP) is focusing on market share growth through innovation and premiumization in the alcohol sector [7] - Boyd Gaming (BYD) is enhancing growth through property upgrades and strategic investments in the gambling industry [7] - Philip Morris International Inc. (PM) is transforming towards a smoke-free future, aiming for a majority of its revenue from reduced-risk products by 2030 [13][15] - MGM Resorts International (MGM) is well-positioned to capitalize on the recovery of the gaming and tourism industries, with a strong digital strategy through BetMGM [17][18] - Diageo Plc (DEO) is focusing on premiumization and innovation, with a strong portfolio of iconic brands and a strategy to enhance direct-to-consumer engagement [20][21][22]

Investment Rating - The report maintains an "Accumulate" rating for the tobacco industry [1] Core Insights - The global tobacco market is projected to reach $951.4 billion in 2024, with a year-on-year growth of 2.6%. The market segments include combustible tobacco at $775.6 billion, new tobacco products at $870 billion, and others [11][19] - New tobacco products, particularly heated tobacco and electronic cigarettes, are experiencing significant growth, with heated tobacco expected to grow by 13.1% year-on-year [11][19] - Major players like Philip Morris International and British American Tobacco are increasing their focus on smoke-free products, indicating a shift in industry dynamics towards reduced harm alternatives [1][66] Summary by Sections Global Tobacco Market - The global tobacco market is expected to grow to $951.4 billion in 2024, with combustible tobacco at $775.6 billion and new tobacco products at $870 billion, reflecting growth rates of 1.6%, 1.9%, and 13.1% respectively [11][19] - The market is dominated by Asia-Pacific, Western Europe, and North America, with China, the USA, and Indonesia being the top three consumers [14][19] Philip Morris International - Philip Morris International's revenue is projected to be $378.78 billion in 2024, with a year-on-year organic growth of 9.8%. The revenue split is 61% from combustible products and 38% from smoke-free products [46][49] - The IQOS brand continues to grow, with user numbers reaching 32.2 million in 2024, a 12% increase year-on-year [55][59] - The company is actively expanding its smoke-free product offerings, aiming for smoke-free products to account for over two-thirds of its revenue by 2030 [65] British American Tobacco - British American Tobacco's revenue is expected to be £25.867 billion in 2024, with a slight organic growth of 1.3%. The revenue breakdown shows a decline in combustible tobacco but growth in new tobacco products [66][69] - The company is diversifying its product range, focusing on electronic cigarettes and heated tobacco, with new product launches expected to drive future growth [66][69] Investment Recommendations - The report suggests focusing on companies like Smoore International, which is linked to British American Tobacco's new HNB product, and the OEM for Philip Morris International's IQOS, Yingqu Technology [1]

Investment Rating - The report maintains a neutral investment rating for the U.S. stock market [1] Core Insights - The U.S. stock market is experiencing a steady recovery, led by the technology sector, with the S&P 500 rising by 5.3% and the Nasdaq increasing by 7.2% [3] - Significant capital inflows have been observed, particularly in the semiconductor and automotive sectors, indicating strong investor interest [4] - Earnings expectations for the S&P 500 constituents have been slightly adjusted upwards, with traditional industries showing the most significant upward revisions [5] Summary by Sections Price Trends - The S&P 500 increased by 5.3% and the Nasdaq by 7.2% this week, with the automotive and semiconductor sectors leading the gains at +16.2% and +13.3% respectively [3] Capital Flows - Estimated capital inflows for the S&P 500 constituents reached +$25.71 billion this week, a significant increase from the previous week's +$2.99 billion [4] - The semiconductor sector saw the highest inflow at +$9.17 billion, followed by automotive at +$6.59 billion [18] Earnings Forecasts - The dynamic F12M EPS expectations for the S&P 500 were adjusted up by 0.1%, with 19 sectors seeing upward revisions, particularly real estate (+0.7%) and materials (+0.5%) [5]