Buy MO. The upside is huge and the downside has mostly been priced into the stock.

Hmmm ... not exactly the logic I would use to pick a Rule Maker stock. Instead, let's run it through some of base criteria to see how it fares:

Quarterly Revenue      $20.8 billion   (OK)
Y/Y Revenue Growth         5.2%        (below our 10% criteria)
Gross Margins             42.7%        (below our 50% criteria)
Net Margins               10.4%        (OK)
Flow Ratio                 0.96        (OK)
Cash/Debt Ratio            0.36        (below our 1.5x criteria)
Cash King Margin          12.6%        (OK)

Looking at the more qualitative criteria, I think it would be easy to give them points for Dominant Brand, Convenience, and Repeat Purchase. However, I would have a hard time giving them much of anything in the Expanding Possibilities and Your Interest categories, simply because of the looming uncertainty with their tobacco-related businesses. That is definitely not a business that "welcomes everyone", and I think many investors would bypass this stock on moral grounds alone (myself included).

All things considered, I have a hard time believing that MO should be given serious consideration as a future Rule Maker holding. I think there are many other companies that score better against our criteria and don't have the tobacco stigma like MO. This doesn't mean it won't be a good investment, because it very well may be. I just don't think it would be a good Rule Maker.

Just my two cents.

the LanceMan