Buy This, Not That: Addictive Products, Different Results

Shah Gilani|April 30, 2025

The numbers don’t lie…

After seeing the earnings reports for two massive consumer brands… I’ve got a no-brainer Buy This, Not That for you…

Company A’s net earnings are down 50% to $384.2 million. The stock is down down 35.5% from March highs. The company pays a 2.77% dividend with a 75% payout ratio.

Compare that to Company B…

It handily beat analyst expectations in the latest quarter. EPS came in at $1.23, better than the $1.19 expected. The stock is up 15% while S&P 500 is down 8%… and the company pays a 6.94% dividend with a 61.2% payout ratio.

When markets turn volatile, investors seek shelter in reliable businesses with strong cash flows.

See why one consumer giant is stumbling while the other continues its steady climb… and which one deserves your investment dollars right now.

It’s all in today’s Buy This, Not That video.

Click on the thumbnail below to watch it.

Note: As today’s video shows… nothing is totally chaos-proof. But I’ve found a stock that’s close to it…

• It’s up roughly 16% on the year – despite all the market nonsense
• It’s gone up every May for the last 5 years CONSISTENTLY
• Looking back through the data, I’ve found a way to play it that’s averaged not 10%… not 20%… but 71% – EVERY MAY since 2020.

Get the ticker here.

Transcript

I’ll clean up this transcript following AP Style rules, improving grammar and clarity while maintaining a similar word count. Here’s the edited version:

Hey, everybody. Shah Gilani here with your weekly BTNT, which is “buy this, not that.”

Today, I’m setting up Altria, the Marlboro maker, against Starbucks. Why, you wonder? They’re not in the same category by a stretch. A friend of mine said, “Well, you might be able to do without your Starbucks, but you’re not going to be able to do without your smokes.” I thought that was clever.

I’m starting with Starbucks.

I’ll begin with the chart of Starbucks. Both of these just had earnings. That’s why we’re highlighting them. So Starbucks up first here.

That’s a pretty ugly chart, and you can see if you zero right up here, down 8.5% in the premarket today. Now it’s going on toward 8:30, this fine Wednesday morning. And Starbucks looks like it’s going to take a good spanking.

Earnings came out, and yes, they were ugly in some respects. In others, not so bad. But the bottom line for Starbucks is the CEO on the call said, “We’re making restructuring changes. We are going to make it better. We’re building the business back better.” Sound familiar?

Brian Nichols talked about free refills, and I don’t think that’s for all the coffees. He talked about adding seats back as customers were complaining about seats. They were complaining about wait times. So they’ve done a lot of hiring to get back to where they want to be as far as “build back better.” And that also impacted them. The numbers weren’t so bad on the big picture stuff, but when you drill down, one number in particular took everyone for a bit of a loop.

Global same-store sales down 1%, not so bad.

Global revenue up 2.3%, pretty good.

China sales were flat, and they had been down 11% in the previous quarter, and everyone was worried about China sales, but they’re flat. Brian Nickel talked about looking for a strategic partner. Perhaps he’s looking for a strategic partner in China. I think that’s to offset some of the impact that American companies are going to have in China with the tit-for-tat tariff wars that are teeing up between the U.S. and China. So that certainly makes sense.

That sounds like a good idea along with the restructuring, but I don’t know that that’s enough to move the needle. What investors really didn’t like was the steep decline in this quarter’s net earnings. Net earnings this quarter were down 50% to $384.2 million. That’s what investors didn’t like.

So where is that coming from? Why the big hit on the net earnings? Well, obviously, the restructuring costs are a part of it and also new hiring.

So how much are they going to do? What’s it going to cost to refurbish a lot of the stores? What are they going to do? And what is the free coffee refill going to cost them? How much is the hiring going to cost them? There are a lot of questions there, and investors don’t like it, and therefore, the stock is taking a hit in the premarket. So, it’s had a tough time so far this year. As far as basic numbers, March of this year, Starbucks was at $117.

Given today’s—let’s say we open up down 8%—that stock will be down 35.5%. That’s a big drop, and that’s a pretty ugly chart. Now if you want to wrangle yourself some Starbucks in there for the dividend, which is 2.77% on a trailing basis on an almost 75% payout ratio, good luck with that. To me, Starbucks isn’t happening.

So not a huge fan of Starbucks coffee myself. The other fancy drinks, of course, how can you not like those? But I’m certainly not a fan of Starbucks stock in here. This is a pretty ugly ride down. So let’s compare that to the Marlboro maker.

Now Altria, I’m going to keep this short because Altria had pretty good numbers in terms of its earnings per share. The gross numbers in terms of sales were down, but investors didn’t seem to mind because in the premarket, you can see we’re up 0.5%, and Altria has had a very good year. It’s had very good year-to-date numbers.

This is a pretty good-looking chart. Year to date, considering the market, the S&P is down 8%. Altria year to date is up about 15%. So certainly like that compared to the S&P down 8%, that’s a huge spread.

Yes, the top-line sales dipped for Altria. I think revenue fell about 4.2% year over year to $4.52 billion. And analysts were looking for $4.62 billion in the quarter. So, yes, a little disappointment there. Didn’t seem to affect the investors’ opinion that much, because earnings per share were better. The analysts were expecting $1.19 a share. It came out at $1.23. So they like that.

What they really like and what investors want to hear is reaffirmation of the 2025 expectations, and that’s what they got. And so the bottom line for Altria is they’re sticking to their 2% to 5% growth for 2025. There was no talk down of that, and investors really like it. But what investors really like here, forget about the analysts, what investors really like, is the trailing yield here on the dividend—6.94% on a payout ratio of 61.2%. So you get almost 7% on a payout ratio of less than 62%.

Starbucks, you get 2.77% on a payout ratio of almost 75%.

Altria is loved for its dividend yield, and that’s why I say, buy Altria, not Starbucks. I’ll catch you guys next week.

Cheers, everybody.