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The following is a list of top sells by Citigroup (NYSE:C) in the last quarter according to its latest 13F filing with SEC.

Stock

Symbol

Shares Held 06/30/2011

Shares Held 09/30/2011

Change in Shares

Lorillard Inc.

LO

5292272

561116

-4731156

Ebay Inc.

EBAY

10363062

653323

-9709739

Exxon Mobil Corp.

XOM

3027943

773996

-2253947

Target Corp.

TGT

5268924

2427258

-2841666

United Technologies Corp.

UTX

2477967

729090

-1748877

Philip Morris International

PM

3793236

2064217

-1729019

Kraft Foods Inc.

KFT

6554359

3366435

-3187924

Source: 13F filing

I agree with Citigroup on Exxon and believe that it can underperform its peers. However, I believe Kraft Foods, Philip Morris and Lorillard are good buy candidates at current levels, instead of sells.

Exxon is the second most gas-focused among the major companies in the sector. It is next only to Royal Dutch Shell (RDS.A) with 48% of its current production from natural gas, compared with 42% of the global majors.

Although globally natural gas prices are strong, they have lagged oil prices in the US. Thus, Exxon, which is overexposed to gas, is definitely not in a sweet spot. Although Exxon’s management is positive that US natural gas prices will catch up with the global prices eventually, I don’t see this happening in near to medium term.

Since the start of 2010, U.S. natural gas production has climbed by an average of 0.4 Bcf/day per month. With macro uncertainty and talks of another recession, I don’t see any factor that can cause supply demand tightness in the US natural gas market.

Kraft is the largest U.S. food manufacturer, and second-largest in the world, behind Nestle (OTCPK:NSRGY). I am bullish on Kraft because of its international growth potential and value creation from the planned spin-off.

Kraft is seeing significant growth in international markets, and in the third quarter, developing markets contributed around 66% of incremental y/y segment profits, and international contributed 86%. In the near future, I expect it will continue to enable Kraft to derive faster-than-average peer growth. It will also improve Kraft’s debt ratio, enabling it to return more cash to its shareholders in the future.

Another major catalyst for Kraft’s stock is its planned split into two companies. Kraft’s business consists of its high-growth snacks business and the stable return grocery business. Kraft is planning to split up these two businesses in FY12. This will unlock significant value by highlighting an above peer growth profile of the global snacks business, driving operational improvements, and by allowing each company to pursue different capital allocation priorities.

Kraft is trading at 14x FY12 EPS, which is over 12% discount to its average 10-year historical PE multiple of 16x. I believe this is a good opportunity to initiate a long position in the company.

Lorillard, Inc. is the manufacturer of cigarettes in the United States. Its Newport is a menthol flavored premium cigarette brand. During the last year, the Newport brand accounted for approximately 90% of its sales revenue. In addition to the Newport brand, its product line has four additional brand families marketed under the Kent, True, Maverick and Old Gold brand names. These five brands include 43 different product offerings which vary in price, taste, flavor, length and packaging. Lorillard's EPS forecast for the current year is $7.65 and next year is $8.54. According to consensus estimates, its top line is expected to grow 4.60% in the current year and 6.30% next year.

Lorillard presents a good buying opportunity in current uncertain times for investors seeking yield, strong cash flow generation and consistent earnings. Its leadership position in the menthol segment, aggressive Newport strategy and emphasis on returning cash to shareholders make it a good investment. Trading at 12.7x forward earnings with 4.8% yield, the stock looks cheap.

I also like Philip Morris. The company is engaged in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States of America. Trading at 13.6x Forward PE and with ~4% dividend yield Philip Morris (NYSE:PM) appears to be an interesting defensive buy with a stable business model.

Source: Citigroup Decreases Its Stake In These Top Stocks