Philip Morris is cheap by just about any measure, especially compared to other large-cap stocks. Its P/E (price/earnings) of 9 at the end of 1999 was less than a quarter the S&P 500's, and its price/sales and price/cash-flow ratios were similarly low. The main reason for this, of course, is the tobacco business, and the market's jitters about possible liability payouts eating into future earnings. Few companies are better prepared for such an eventuality, though. The $6 billion in cash Philip Morris generates each year is enough to pay for hundreds of lawsuits.
Conclusion: Looking Both Ways >>