Tuesday, February 15, 2011

Stock Idea: Lorillard Inc. (LO, $77.47)

(May 16, 2011 update: All future stock posts will appear on my new subscription-only website at www.GoodfellowLLC.com. Please visit!)

Lorillard Inc. (LO)
manufactures Newport cigarettes and other tobacco products in North Carolina.

Projected consensus earnings per share are expected to grow 9.9%, 10.3% and 10.9% during fiscal years 2011 through 2013. The dividend is $4.50 per share, with a yield of 5.8%! The low price/earnings ratio is 11.5. Ladies and Gentleman, Lorillard is what is known as a value stock.

The stock recently spent a year trading in the $72 to $80 area, then briefly launched close to $90 before promptly falling back down to $74. I think the stock could reach $83 pretty easily near-term, barring any unusual corporate or stock market events, and with a little patience, an investor could be rewarded with a retracement back to the $90 area.


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