Philip Morris International Shows Strong Growth as Billionaires Invest

Tobacco has historically been a stable sector, known for high dividend yields and resilience during economic downturns. However, Philip Morris International (NYSE: PM) has made headlines in 2024 with a significant stock increase of 38%. This surge is attributed to its successful transition to smoke-free products like Iqos heat-not-burn sticks and Zyn nicotine pouches.

High-Profile Billionaire Investors Join the Philip Morris Trend

Several billionaire investors are taking notice, accumulating shares of the thriving tobacco company in the third quarter. Notable purchases include:

• Stanley Druckenmiller’s Duquesne Family Office acquired 245,280 shares of Philip Morris, increasing its total to 1.13 million. Druckenmiller, who previously ran the successful Duquesne Capital Management hedge fund, remains a closely watched figure in investing.
• Ken Griffin’s Citadel Advisors bought 1.79 million shares, bringing its total to 2.9 million shares, valued at $352.4 million. Citadel is renowned as one of the world’s largest and most successful hedge funds since its establishment in 1990.
• Rajiv Jain’s GQG Partners emerged as the largest hedge fund buyer, acquiring 6.4 million shares, amounting to nearly 42.7 million shares, with a total value close to $5.2 billion.

Image source: Getty Images.

What’s Fueling Investor Interest in Philip Morris?

Philip Morris stands out due to its unique blend of growth potential, income generation, and a stable business model. The company’s stock performance this year has been impressive, attracting attention from hedge fund managers. The firm is also leading the industry’s shift toward next-gen products.

Currently, Philip Morris provides a dividend yield of 4.2%. While this yield is respectable, it falls short compared to other companies in the tobacco sector. Nevertheless, the company’s growth story is compelling.

In the third quarter, revenue rose 11.6% organically, reaching $9.9 billion. Noteworthy growth was seen in heated tobacco units and oral smoke-free products like Zyn, which saw an 8.9% increase. Even traditional cigarette shipments climbed 1.3%.

These factors contributed to a 13.8% rise in operating income to $3.7 billion, while adjusted earnings per share surged 14.4% to $1.91. Smoke-free products now account for 38% of revenue and 40% of gross profit, and this share is on the rise. Additionally, the company recently raised its quarterly dividend by 4% to $1.35 per share.

Is It Worth Investing in Philip Morris?

Following its 2022 acquisition of Swedish Match, Philip Morris gained ownership of Zyn and the rights to sell Iqos products in the U.S. This positions the company favorably in the emerging growth market of next-generation tobacco products. Its success provides a competitive edge over peers like Altria and British American Tobacco.

Moreover, by focusing primarily on international markets, Philip Morris may avoid some risks associated with U.S. trade policy and tariffs. As smoking rates are generally higher outside the U.S., and the decline of traditional cigarettes is slower, the company is well-placed for potential growth.

Nicotine remains a substantial market, and Philip Morris is finding innovative ways to reach consumers, making it a company to watch in the evolving tobacco landscape.

Should You Invest $1,000 in Philip Morris International?

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Jeremy Bowman has no positions in the stocks mentioned. The Motley Fool recommends British American Tobacco P.l.c. and Philip Morris International, and suggests the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.