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ERROR: type should be string, got "https://www.barrons.com/articles/altria-stock-rises-on-report-it-may-invest-in-juul-1543505932\nAltria Stock Rises on Report It May Invest in Juul\nTeresa Rivas\nNov. 29, 2018 10:38 am ET\nPhotograph by Ruvim Noga\nAltria Group (MO) stock is on the rise Thursday, on reports from The Wall Street Journal that it’s planning to take a stake in vaping firm Juul Labs.\nWhere we were: The rise of e-cigarettes and vaping products have been one of many headwinds for traditional tobacco firms.\nWhere we’re headed: A deal would make sense, say analysts, and improve Altria’s competitive positioning.\nConsumer staples companies have largely underperformed the market in 2018, hurt by issues ranging from changing consumer habits to higher input costs. Yet fewer industries have been hit harder than tobacco, with Altria down more than 22% year to date, Philip Morris International (PM) off 18%, and British American Tobacco nearly 47% lower. Along with the woes of staples, tobacco stocks face a host of specific headwinds, including regulation risk and competition from new entrants.\nAs for the latter, vaping has become a particularly thorny problem for tobacco—while traditional players have been slow to bring e-cigarettes and related products to market, new companies have been quick to gobble up market share, as well as attract new users, especially among youth. That hasn’t gone unnoticed by the government, and while crackdowns on vaping products in the past has been seen as a positive for big tobacco, more recently it’s become a concern, as the Food & Drug Administration is taking aim at menthol as well as e-cig flavoring.\nIn the face of these problems, perhaps then it’s no surprise that many industry watchers have wanted these two sides of the industry to team up rather than fight one another. And they just may get their wish, if Altria buys a “significant” minority stake in closely held Juul, as the Journal reports the two companies are discussing.\nThe report states that any deal is still weeks away, but analysts are already happy about the news.\n“Finally, it’s all coming together and making sense!” writes Wells Fargo’s Bonnie Herzog. She reiterated an Outperform rating on Altria, writing that she has long felt that Altria should acquire Juul, which she estimates enjoys some $2 billion in annual revenue. Juul’s sales strength means that the company won’t get a bargain, but nonetheless she believes “this would be the absolute right decision for Altria given where we think the reduced-risk industry is heading and because Juul is the ‘IT’ brand.” Thus, if the rumors are true, a “stake in Juul would help to round out MO’s reduced-risk portfolio strategy.”\nStifel’s Christopher Growe also reiterated a Buy rating on Altria, writing that if true, the deal would be yet another example of the company “flexing its might.” He’s keen to know more about the cost of the stake (although Altria can easily afford it with its strong balance sheet), and while he’s surprised by the news (unlike Herzog), he writes that it “fits with Altria’s ultimate goal to dominate each category in which it competes…In Cigarettes, Altria holds a #1 position and an over 50% market share; in Smokeless, the company holds a #1 position with a 54% market share; in Cigars, the company holds a #1 position with a dominant market share; and now, potentially, in E-cigarettes, the company would hold a roughly 75% market share and a #1 position.”\nMorgan Stanley’s Pamela Kaufman reiterated an Equal Weight on Altria, but believes that the strategic rationale for a deal makes sense, a Juul stake would give the company “exposure to a fast-growing product that poses a threat to its cigarette business.” Moreover, she writes that FDA pressure could actually be a good thing, as Altria will probably pay less now for a stake than it would have before the agency stepped up its campaign against vaping.\nThere is certainly precedent for a deal. Incumbent staples giants with plateauing growth and robust balance sheets have long used their financial flexibility to invest in fast-growing startups, much as Coca-Cola (KO) did with Monster Beverage (MNST), and McDonald’s (MCD) with Chipotle Mexican Grill (CMG). Altria itself hasn’t been shy about buying its way into new areas of the market either, for example snapping up cigar maker John Middleton over a decade ago.\nAltria is up 1.5% to $55.77.\nWells Fargo has long been pounding the table for Altria.\nPhilip Morris stock got some relief with its recent earnings report."