Lorillard's fans in the investment community say that the company is underappreciated on Wall Street -- partly because of its involvement in tobacco -- and that it is the most attractive takeover target in the consolidating global cigarette industry. There lately has been talk that Reynolds, maker of the Camel, Winston and Kool brands, might buy Lorillard for a sizable premium above the recent share price of $61. Reynolds and Lorillard declined to comment.The dividend also gets my attention.
Deal or no deal, Lorillard looks appealing. Its shares trade at 11 times projected 2009 profit of $5.50 a share and provide a yield of 6%. Lorillard pays out 70% to 75% of its profit in dividends. The company, which was spun off by Loews (L) last year, has a great balance sheet, with more than $1 billion of cash at year end and no debt.
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Will Lorillard Meet Its Match?
 Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments. |
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