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Best Stock to Buy on Anheuser-Miller Deal is Altria

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The world needs rivals. Ford versus Chevy. Coke versus Pepsi. Me versus the Brawny Paper Towel guy. Sometimes it all boils down to a matter of preference and the difference is very subtle. Other times there’s a clear cut king of the mountain and challenger trying to rise to the top. 

Earlier this week Anheuser-Busch InBev (BUD - Free Report) proposed a takeover of SABMiller . The merger would combine Budweiser and Miller beers. I never even put Budweiser and MGD in the same refrigerator. It’s madness! 

Here I thought the whole argument was great taste or less filling. Never mind the bottles versus cans dilemma. I wonder what Miller Lite Spokesmodel Kitana Baker has to say about all this. Are they going to make commercials with her riding in on the Clydesdales? I thought she was allergic. Can she even ride a horse? Kitana! (Call me)

Everybody here in Chicago knows that Budweiser is really just a byproduct of our waste water. Where do you think that river runs Cardinal fans? That’s right, down the Illinois River, through the amber waves of grain, into the mighty Mississippi and directly into your twelve ounces of disappointment. Sorry Anheuser-Busch but I’m still a little miffed by what you did to Goose Island. My boy Eric behind the scenes agrees. 

Let’s not forget the big winners in this potential deal. When the news broke, SABMiller shares shot up 20%. That move was huge for Altria (MO - Free Report) who owns a 27% stake in Miller. That’s right, Altria and Miller together like drinking and cigarettes. Ironic, I know. Throw in publicly traded owner of 46 adult clubs, night clubs and sports bars, RCI Hospitality Holdings (RICK - Free Report) and Vicodin maker Abbvie (ABBV - Free Report) and you’ve got a perfect storm of vice. 

Anheuser is looking for some way to get analysts fired up about their prospects. This Zacks Rank #5 (Strong Sell) has seen earnings estimates fall like the ninety-ninth bottle of beer on the wall, the ninety-ninth bottle of beer.  With four analysts dropping their estimates for the current year, our Zacks Consensus Estimate has gone from $5.49 to $5.18. Maybe they could find one of those “Real men of genius” from the radio spot to come help them out. 

Honestly, I think the way to play this deal is to go with Altria. They are a Zacks Rank #2 (Buy) in an industry that’s in the Top 28% of the 265 industries we rank with our Zacks Industry Rank. Looking at the chart shares of MO have carved out a good range here from $47 to $56.50. An overbought Commodity Channel Index with shares trading in the mid-$50s is a little bearish. I’m hoping a pullback to the 25-day moving average is met with renewed buying. Volumes have ticked up here a bit as well. 

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