UST Inc., through its subsidiaries, manufactures and sells smokeless tobacco products (snuff & chewing tobacco), wines and craft beers, and premium cigars. For the nine months ended 9/30/00, net sales rose 3% to $1.15B. Net income fell 7% to $326.7M. Revenues reflect higher selling prices and volume increases in the tobacco and wine segments. Net income was offset by lower margins in the tobacco and wine segments.

December 19, 2000

UST is known better by the name of its subsidiary, United States Tobacco Company. The company has benefited this year from strong pricing trends for its core smokeless tobacco names Skoal and Copenhagen. The company also has a profitable line of affordable wines. UST is an example of a company that is considered to be recession proof. There are certain products consumers refuse to go without regardless of their current economic condition, and tobacco is one of them. A strong trend in the Money Flow and OBV tells us that investors are buying this stock. As long as fear dominates technology stocks, we will continue to seek out plays that are currently attracting available investing dollars. UST is on the verge of a breakout from a double top pattern. A move above $26.25 accompanied by strong volume would confirm a breakout. The stock closed today slightly above its short-term trend line. Therefore, we see $25.50 as support for tomorrow. The 10-DMA should provide additional support just under $25.00. Traders could consider a position in UST on a move above $26.00 on 300,000 shares or better traded by 1:00 PM EST.

Picked on December 19th @ $25.75
Change since picked +0.00
Stop Loss @ $22.50

December 21, 2000

Philip Morris is having an impressive run. The stock has moved up 29% in the last month despite a generally weak market. On Wednesday, shares of MO hit a new 52-week high of $44.50 before pulling back to a close of $44.13 on volume of 11.4 million shares. The stock retested support at the 5-dma on Thursday but it rebounded later to close even on the session. MO has a very nice chart pattern, trending up on the 5-dma with increasing volume, so MO could be ready to challenge it all-time highs. In the meantime, support is now up to Tuesday’s intra-day high of $43.31 with stronger support at the 5-dma, currently at $42.56. Resistance is Thursday’s intra-day high of $44.50 and then the 2/5/99 intra-day high of $47.50. Traders should be looking for entry points on a bounce off of $43.31 or a move above $44.50 on volume greater than 3.5 million shares by midday. We have moved our stops up to $42 to protect profits.

Picked on October 26th @ $36.00
Change since picked +8.13
Stop Loss @ $42.00