Altria Group Gains 21% in 6 Months: How to Play the Stock?

Altria Group, Inc. MO has delivered an impressive 21.2% gain over the past six months, outperforming the Zacks Consumer Staples sector’s growth of 10.7% and the broader S&P 500’s advance of 6.3%. While the stock trails the broader Zacks Tobacco industry’s stellar 40.8% rise, it continues to demonstrate strong relative strength within the peer group.MO Price Performance vs. Industry, S&P 500 & SectorImage Source: Zacks Investment ResearchPerformance among major tobacco players, Philip Morris International Inc. PM, Turning Point Brands, Inc. TPB and British American Tobacco p.l.c. BTI, has also been strong. Philip Morris surged 51.2% over the past six months, while Turning Point Brands and British American Tobacco gained 28.5% and 37%, respectively.As of the latest trading session, Altria closed at $60.25, just 1.6% below the 52-week high of $61.26, reached on May 7, 2025. The stock’s solid upward trajectory is further validated by the position above key technical benchmarks, 50-day and 200-day simple moving averages of $58.53 and $53.54, respectively, indicating sustained bullish momentum and price stability.MO Trades Above 50 & 200-Day Moving AverageImage Source: Zacks Investment ResearchWith such strong performance and positive technical indicators, Altria is gaining attention among investors looking for stability, income, and potential upside. But what’s fueling this upward move? And more importantly, can it continue? Let’s explore what’s driving Altria’s rally and how investors might consider playing the stock from here.What’s Driving the Rally in Altria?One of the key drivers behind Altria’s recent rally is the ability to maintain strong pricing power in the core combustible tobacco segment. Despite declining cigarette volumes across the industry, Altria’s flagship brand, Marlboro, continues to command pricing premiums and brand loyalty. In the first quarter of 2025, the company achieved a 10.8% net price realization in smokeable products, helping drive a 2.7% increase in adjusted operating company income.In combustible tobacco, Marlboro remains the cornerstone of Altria’s profitability. The brand expanded its share of the premium category to 59.3% in the first quarter. Altria attributes this stability to the use of advanced Revenue Growth Management tools, which allow the company to manage pricing and promotional strategies at the store level. This precision helps Marlboro maintain leadership, while the repositioning of Basic supports share retention in the discount segment.Altria’s growth in smoke-free products, especially the oral nicotine pouch brand, on!, is another key contributor. In the first quarter, on! shipments rose 18%, and the brand grew share of the oral tobacco category to 8.8%, while share within the nicotine pouch segment reached 17.9%. The success of the “It’s On!” marketing campaign significantly boosted brand visibility, driving a fivefold increase in consumer impressions. In the e-vapor category, Altria remains committed to long-term participation despite recent setbacks. Following the temporary market withdrawal of its NJOY ACE product due to regulatory and patent challenges, the company is working to refine its product pipeline and re-enter the market with improved offerings tailored to consumer preferences. At the same time, Altria is advocating for regulatory reform and stronger enforcement to curb the rise of illicit disposable e-vapor products, which now account for over 60% of the U.S. market.The company also continues to deliver on the commitment to shareholder returns, distributing $1.7 billion in dividends and repurchasing 5.7 million shares for $326 million during the first quarter. With a strong balance sheet, a leading position in premium tobacco, and expanding smoke-free initiatives, Altria remains well-positioned to generate long-term value for income-oriented investors.Altria’s Valuation PictureAltria is currently trading at an attractive valuation relative to both historical averages and the broader industry. The stock's forward 12-month P/E ratio stands at 11.03, modestly above the one-year median of 10.27, yet well below the industry average of 15.28. This positions Altria as a compelling value opportunity among major tobacco players. Peers such as Philip Morris and Turning Point Brands trade at significantly higher multiples of 22.88 and 20.03, respectively, while British American Tobacco trails just behind at 10.41. Notably, MO currently holds a Value Score of B, indicating that it offers solid value relative to the market.MO P/E Ratio (Forward 12 Months)Image Source: Zacks Investment ResearchHow to Play Altria Stock?Altria’s recent rally reflects not only technical momentum but also solid underlying fundamentals, effective strategic execution, and a strong commitment to delivering shareholder value. The company’s resilient pricing power in its core tobacco business, combined with growth in its smoke-free portfolio and a proactive approach to regulatory challenges, positions it well for long-term performance. With a discounted valuation and attractive dividend yield, Altria offers a compelling mix of stability and upside. This Zacks Rank #2 (Buy) stock stands out as a solid opportunity for value and income-focused investors seeking exposure to the tobacco sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Altria Group, Inc. (MO): Free Stock Analysis Report Philip Morris International Inc. (PM): Free Stock Analysis Report British American Tobacco p.l.c. (BTI): Free Stock Analysis Report Turning Point Brands, Inc. (TPB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks