Philip Morris (PM): Buy, Sell, or Hold Post Q3 Earnings?

NEW YORK CITY (dpa-AFX) - Friday, Philip Morris International(PM) presented scientific evidence to the U.S. Food and Drug Administration's (FDA) Tobacco Products Scientific Advisory Committee.

This was part of the agency's review of a Modified Risk Tobacco Product designation for PM's ZYN nicotine pouches. If granted, this designation would allow PM's U.S. businesses to inform legal-age adult smokers that switching completely from cigarettes to ZYN significantly lowers the risk of several smoking-related diseases.

According to PM, the FDA noted that the proposed reduced-risk claim is scientifically accurate, while youth nicotine pouch use remains relatively low.

The company also stated that the evidence showed ZYN contains substantially fewer harmful chemicals than cigarettes and supports complete switching among adult smokers.

PM is currently trading at $170.44, down $0.39 or 0.23 on the New York Stock Exchange.

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By Nathaniel Baker, Teresa Rivas, Jacob Sonenshine, Todd Chanko, Josh Schafer, and Dan Victor

As 2025 winds to a close, Barron's Investor Circle reporters are, not unexpectedly, already staking out the investment landscape for 2026.

What parts of the market are we bullish on for next year? Within those sectors, what stocks do we like? Do we have any particular favorites?

Internal discussions and brainstorming with market participants identified five segments we think can outperform the S&P 500 in 2026 (in no particular order):

• Restaurant stocks through the AdvisorShares Restaurant ETF
• Home builders and residential real estate proxies via the Hoya Capital Housing ETF
• Consumer staples (State Street Consumer Staples Select Sector SPDR ETF)
• Artificial intelligence (Global X Artificial Intelligence & Technology ETF)
• Cannabis stocks (AdvisorShares Pure US Cannabis ETF)

We discuss each sector in turn, name individual stocks of interest for each, and in several sections even choose our favorite. Read on and supply your comments in the section below!

Restaurants

The argument for restaurant stocks starts with the fact that consumer demand is positioned well. The cyclical nature of the industry means restaurants can enjoy more growth against an encouraging macro backdrop: The Federal Reserve has cut interest rates, and will cut more if the rate of inflation continues to drop toward its 2% goal. It's also pumping $40 billion monthly into the short-term Treasury market, another factor meant to keep fixed-income prices high — and rates low. This will help consumers spend more on going out next year versus 2025. Lower rates tend to boost economic activity gradually, not all at once.

The industry can also benefit from lowered expectations, with relatively easy sales comparisons for 2026. This year, mild inflation and a greater volume of meals sold pushed sales up just over 8% year over year, below the 11.5% annualized growth since 2020, according to our calculations of St. Louis Fed data. The takeaway: growth slowed this year, creating a low-enough base of expansion. As long as people have more money to spend next year and the economy ultimately keeps producing more jobs, continued growth shouldn't be very difficult.

This will expand profit margins because wage growth has been a few percentage points below sales growth. Mix in some fixed costs, and revenue should rise faster than expenses.

If the market expects these trends to continue into 2027, the stocks could rally more.

Individual stocks to watch:

• McDonald's
• Yum! Brands
• Chipotle Mexican Grill
• Restaurant Brands International
• Domino's Pizza

All trade within a point above or below the S&P 500's 22 times forward 12-months earnings, whereas they can trade at substantial premiums in the last five years.

Our favorite: Domino's trades at 22.5 times earnings, versus a more than 50% premium in moments when the market is more confident in its business. That confidence should arrive in 2026, given that analysts expect continued market share gains within the pizza category. Average analyst guidance is for total revenue growth of close to 7%, driven by mild same-store-sales growth and more locations around the world, according to FactSet. Key drivers include a ramp-up of its Uber Eats and DoorDash presence and faster delivery times.

• Jacob Sonenshine

Home builders

Now that the Fed has delivered on its anticipated 25 bps rate cut, a foundation for renewed growth in home formation has been laid. According to a study by Realtor.com, mortgage rates are expected to decline modestly to 6.3% from 2025's 6.6% average, while single-family home housing starts are expected to climb 3.1% to 1 million. Investors may want to allocate room in their 2026 strategy as housing trends stabilize.

Individual stocks to watch:

• Toll Brothers. Home builder of detached and attached homes mainly on both coasts. The stock is up 11% year to date, generates a 6.6% free cash flow yield, and pays a modest 1% dividend.
• La-Z-Boy. The eponymous manufacturer of the legendary chair is down 9.6% year to date but has had a dramatic resurgence in the last quarter, up 16.9%. Who wouldn't want to plop into their new La-Z-Boy in their new den? The stock generates a 7.5% free cash flow yield and offers a 2.43% dividend yield at current prices.
• Truist Financial Corp. The financial holding company provides a range of services to individual and commercial customers. Its stock is up 15.4% this year. Truist generates a 6.9% free cash flow yield and offers a 4.16% dividend yield at current prices.

Our sector favorite: La-Z-Boy. The nearly 100-year old company, founded in a garage in Michigan, enjoys universal brand recognition, trades at a forward P/E multiple of 12.9, and has grown its dividend 10% year over year. It stands to benefit not only from the potential lift in home formation, but also from the continuing preference of streaming new movies over theater attendance, according to a recent AP-NORC Public Affairs poll.

• Todd Chanko

Consumer Staples

Essentials have been anything but when it comes to stock performance: The State Street Consumer Staples Select Sector SPDR exchange-traded fund has basically gone nowhere in 2025. In fact, XLP has been a laggard for some time, with owners seeing a measly 16% gain over the past five years, a period when the S&P 500 gained nearly 85%.

Nor can they comfort themselves with the fact that defensives have been out of favor, as the healthcare and utilities sectors have rallied too.

"Everyone — just hit the reset button," was the title of the recent 2026 staples outlook from RBC Capital Markets analyst Nik Modi, who wrote that "2025 has been one of the toughest we can remember in our 25 years covering the consumer staples sector (stock performance and stock-picking!)."

Unfortunately next year doesn't look much better, with the Street nearly universally seeing another tough setup for staples, particularly packaged food, which has continued to be one of the most sluggish areas of the sector. A lack of pricing power and commodity volatility will continue to be hindrances for many of these stocks. GLP-1s are a worry for snack companies, and overall wellness trends mean highly processed foods remain out of favor.

Yet investors don't have to avoid it all together if they look for companies bucking the trend with resilient volumes despite a tough backdrop.

Individual stocks to watch:

• Philip Morris has been a standout in 2025 and that momentum is likely to continue. The company's reduced risk products, including its signature iQos device that heats rather than burns tobacco, will likely continue to see rapid adoption. The shares look cheap after a late-year selloff and sports a juicy dividend.
• Monster Beverage looks like it's another momentum play for 2026. Demand for energy drinks remains high, making it another rare bright spot in staples and Monster looks poised to keep benefiting. The shares aren't cheap but are nonetheless below their five-year average, and it looks like Monster will notch another year of double-digit earnings growth.
• Bellring Brands shares have fallen off a cliff in 2025, but could be a potential underdog -- or long-shot -- for 2026. It's a play on Americans' increasing quest for protein, with ready-to-drink shakes and nutrition bars, but it's been hit with tariffs, raw material problems, and disappointing earnings. Yet with the bar already set low for 2026, the shares could rebound on any unexpected strength. The average analyst target implies some 30% upside while consensus calls for a return to double-digit earnings per share growth, although valuation isn't a steal.

• Teresa Rivas

Artificial Intelligence

The bull case here is rather simple: AI capex continues to ramp higher and companies who are increasingly showing that AI is boosting their sales and profits will keep winning in the market. In other words, exactly what happened in 2025. The AIQ ETF offers a diversified way to express AI optimism with just three of the Magnificent Seven — Alphabet, Apple and Tesla — inside its 10 largest holdings.

Even in 2025 when the AI trade largely rotated away from some of 2023 and 2024's market leaders, AIQ rose about 32%, outperforming the Roundhill Magnificent Seven ETF and the S&P 500. So this ETF could likely hang on if the AI trade shifts but doesn't fully disappear.

• The stocks listed below are held by AIQ and are also Barron's stock picks.
• Names of interest:
• Alphabet
• Salesforce
• Netflix

• Josh Schafer

Cannabis

The bulls case rests in no small part on legalization efforts, including news that Trump will sign an executive order that reschedules marijuana under Federal law from a Schedule I to Schedule III controlled substance. This should ultimately pave the way for more states to legalize the recreational market, boosting demand that ultimately supports stronger growth and earnings for the major players. Dispensary stocks (MSOs) currently trading over the counter may be eligible to uplist to major exchanges like the Nasdaq or NYSE.

Individual stocks to watch:

• Curaleaf Holdings Inc.
• Trulieve Cannabis Corp.
• Green Thumb Industries
• Tilray Brands
• Canopy Growth Corp.

Our favorite: Curaleaf is the largest holding in the MSOS ETF. The company operates in 17 states with 153 retail locations, making it uniquely positioned to benefit from continued growth in the U.S. cannabis market. Curaleaf also has exposure to multiple countries such as the U.K., Germany, and Australia, each of which are expanding medical marijuana access. Generating $1.3 billion in annual sales, Curaleaf's improving fundamentals warrants a spot on investors' radars.

• Dan Victor

By Laura Cooper

The Food and Drug Administration cleared on! Plus nicotine pouches to be sold in the U.S. market, the first authorization under a government program to expedite regulatory approvals for certain tobacco products.

Altria, which makes Marlboro cigarettes in the U.S., owns the company Helix Innovations that produces on! pouches. The products listed as authorized include 6-milligram and 9-milligram nicotine pouches in mint, tobacco and wintergreen flavors.

On! Plus joins the ranks of Zyn, America's most popular nicotine pouch, which gained FDA authorization to stay on the market in January.

In a statement, Altria said that it was pleased that some on! products were authorized, marking a milestone in providing products other than cigarettes. The company said in a social media post that on! Plus will resume taking new orders for retail accounts in Florida, North Carolina and Texas and on e-commerce soon.

In September, the FDA launched a pilot program aiming to streamline the review process for premarket tobacco applications, specifically for nicotine pouch products. This was done based on the understanding that "health risks for different tobacco products exist on a spectrum," the agency said.

Altria announced last week that its current Chief Executive Billy Gifford would retire in May. Its current chief financial officer Sal Mancuso, who has been with the company since 1990, will succeed Gifford as CEO.

This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).

STAMFORD, CT--(BUSINESS WIRE)--December 12, 2025--

Regulatory News:

The Board of Directors of Philip Morris International Inc. today declared a regular quarterly dividend of $1.47 per common share, payable on January 14, 2026, to shareholders of record as of December 26, 2025. The ex-dividend date is December 26, 2025. For more details on stock, dividends and other information, see www.pmi.com/dividend.

Philip Morris International: A Global Smoke-Free Champion

Philip Morris International is a leading international consumer goods company, actively delivering a smoke-free future and evolving its portfolio for the long term to include products outside of the tobacco and nicotine sector. The company's current product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, nicotine pouch and e-vapor products. Our smoke-free products are available for sale in over 100 markets, and as of June 30, 2025 PMI estimates they were used by over 41 million legal-age consumers around the world, many of whom have moved away from cigarettes or significantly reduced their consumption. The smoke-free business accounted for 41% of PMI's first-nine months 2025 total net revenues. Since 2008, PMI has invested over $14 billion to develop, scientifically substantiate and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes. This includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. Following a robust science-based review, the U.S. Food and Drug Administration has authorized the marketing of Swedish Match's General snus and ZYN nicotine pouches and versions of PMI's IQOS devices and consumables - the first-ever such authorizations in their respective categories. Versions of IQOS devices and consumables and General snus also obtained the first-ever Modified Risk Tobacco Product authorizations from the FDA. With a strong foundation and significant expertise in life sciences, PMI has a long-term ambition to expand into wellness and healthcare areas and aims to enhance life through the delivery of seamless health experiences. References to "PMI", "we", "our" and "us" mean Philip Morris International Inc., and its subsidiaries. For more information, please visit www.pmi.com and www.pmiscience.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20251211634268/en/

CONTACT: Philip Morris International

Investor Relations:

Stamford, CT: +1 (203) 905 2413

Email: InvestorRelations@pmi.com

Media: Corey Henry

Lausanne: +41 (0)58 242 4500

Stamford, CT: +1 (203) 905 2410

Email: Corey.Henry@pmi.com

NEW YORK CITY (dpa-AFX) - Italian luxury sports carmaker Ferrari N.V. (RACE) announced Wednesday that Ferrari S.p.A., its wholly-owned Italian subsidiary, has renewed and strengthened its multi-year partnership with Philip Morris International, Inc. (PM).

Under the agreement that takes effect on January 1, 2026, Philip Morris International becomes a Premium Partner of Scuderia Ferrari HP and a Series Partner of the Ferrari Challenge Trofeo Pirelli, continuing a collaboration that has spanned more than 50 years.

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