The stock price of tobacco giant Philip Morris has more than tripled from its pandemic low in March, 2020. Six and a half years later now, it trades in the vicinity of $190 a share, up 240% not counting the very generous dividends. Turns out that even in the AI era, an addictive product with pricing power is enough to beat the market.
Investors considering Philip Morris now, however, should keep in mind that they cannot profit from yesterday’s growth. The risk/reward ratio near $200 per share is a lot different from what it was near $60. The price-to-earnings multiple, which was near 10 six years ago, stands at 23 today, while sales continue to grow at a mid-single-digit pace. In other words, the easy money has been made. Not to mention the Elliott Wave warning the chart below is sending.
Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!
It reveals that the post-2020 uptrend has produced a textbook five-wave impulse pattern, marked (1)-(2)-(3)-(4)-(5), where the five sub-waves of (1) and (3) are also visible. According to the theory, a three-wave correction follows every impulse. So instead of extrapolating the past into the future, we expect a bearish reversal to trigger a ~30% decline soon. If this count is correct, it could take at least a couple of years for Philip Morris to complete the corrective phase of the cycle near $140. Right now, there are more than 20 other companies in the EWM Interactive portfolio with much better prospects.
In our Elliott Wave PRO subscriptions we provide analyses of Bitcoin, Gold, Crude Oil, EURUSD, USDCAD, USDJPY and the S&P 500 twice a week! Check them out now!
