Altria (MO) reported its earnings on January 31. Since the company’s earnings, the stock has gained nearly 3.2% as of February 4. The company has become a center of attention amid the surge in the cannabis industry with Altria acquiring a 45% stake in Cronos Group (CRON). Cronos Group is one of the top cannabis companies besides Canopy Growth (WEED), Tilray (TLRY), and Aurora Cannabis (ACB) that have dominated in the Canadian market.
Tobacco slowing down
However, Altria has been struggling with weakness in tobacco consumption over the years and has been under pressure to look for a catalyst for growth that would capture the transition from tobacco to an alternative product. According to Altria, cannabis and e-cigarettes are two of those catalysts for the company’s long-term growth.
In its earnings call, the company’s chair and CEO, Howard Willard, stated that the company’s investments in e-cigarette company JUUL and cannabis company Cronos Group, following closing, will give the company new growth opportunities and at the same time income stream diversification. He believes that these investments will drive Altria’s future earnings and dividend growth. He called these two investments “fast-growing adjacent categories.”
Next, we’ll discuss how Altria could help accelerate Cronos Group’s growth.