Warren Buffett once said, "I'll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It's addictive; and there's fantastic brand loyalty." On July 27, 2017, the FDA announced that it was going to take steps that to reduce nicotine levels in tobacco products to non-addicting levels. Apparently, investors seemed surprised as Altria's (NYSE: MO) shares plummeted close to 16% since the announcement. In this post, I will show that Altria's shares have been oversold.
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