Shares of Altria Group (NYSE:MO) are cratering again as the company is coming off yet another quarter where it had to write down its investment in Juul.
At $4.1 billion, isn’t not as large of an adjustment as the $4.5 billion it wrote off last year, but that’s still a big hit the company’s bottom line.
The danger is that there’s no guarantee that there won’t be more write-downs as vaping-related health issues are still a concern.
The stock is down 6% over the past month and while it’s not at a 52-week low, it is in oversold territory. Currently, it’s at a Relative Strength Index (RSI) of 25. RSI measures a stock’s momentum, typically over the past 14 trading days.
When the RSI falls below 30 that suggest there’s been excessive selling and a bounce back may happen. While that may make it an attractive buy on the dip, given the risks the company is facing relating to Juul and even its investment into cannabis stock Cronos Group (TSX:CRON)(NASDAQ:CRON) which also has exposure to vaping, things could get a lot worse for Altria before they get better.
Altria even adjusted its expected growth targets for earnings per share, adjusting them down from 5% to 8% to a range of 4% to 7% for the next couple of years. The company still has a strong business but with vaping more of a question mark, its growth is not as certain as it once was.
But for investors who are willing to take on the risk and hang on, the stock’s dividend yield is now up to 7% and could be a great source of recurring cash flow.
