TRADE #42 - Buy MO 50s @ $45.04 in Roth IRA
I bottom-fished 50 shares of Altria Group Inc (MO) today in my Roth IRA portfolio. MO suffered a 9% slide today after an unfavorable judge ruling.
My investment is mostly driven by the following thinkings:
- I understand that MO and the entire tobacco industry have some more risks after this ruling. However, as an ex-investor of RJR for more than one year, I am quite confident that all legal challenges to the industry are short-lived, and this time I see no exception.
- MO has substantial earning power from the Marlboro franchise and the economy recovery will only add to its pricing power. At $45, the stock is trading at 9.3 times this year's EPS and 8.6 times forward EPS.
- The management is capable: turning ROE of 34% for such a large company without being over-leverage (debt/equity ratio is 0.80).
- At $45, it's dividend yield is over 6% now, which adds safety to this investment.
My target price for MO is $60. I will probably add more positions if MO falls to below $40. I may also pick up RJR again if price becomes attractive.
BTW, this is my first purchase in the BrownCo Roth IRA account.
As part of my new year resolution to dig myself out from the dismal 2004 portfolio performance, today I sold my entire holdings of Talk America (Symbol: TALK) in my Roth IRA account. Read
I'm bottom-fishing again: with today's 2% jump in NASDAQ, I added 10 contracts of WDMH (QQQ Jan 06 $34 Put) at $3.50 into my Roth IRA account. Now that my bearish option plays (below table) are valuing at close to $8,800, I probably will not ... Read
I made another round of bearish investment this morning and got 2 contracts of WDMG (QQQ Jan 06 $33 Put) in my Roth IRA account at $3.00/share. Thanks to a commission charge of $23.50. My actual cost basis is around $3.12/share. Believe me, I never ... Read
To capitalize the multi-week runup of OCA and mitigate my portfolio's significant exposure on a single issue, I sold 500 shares in my Roth IRA account at $8.65 apiece. I still hold 1,000 shares of OCA in my Datek account. Read
