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About a month ago, I wrote an article titled Philip Morris: Still Going Strong. After Philip Morris International Inc.'s (NYSE:PM) second quarter results, shares drifted higher, and we recently saw a new 52-week high at $93.60. Now that shares have drifted back to $89, it's time to look at possibly entering the name again. As I've stated in numerous Philip Morris articles over the past year, this name has been a great buy on pullbacks. We have seen another one recently, and that may provide the perfect opportunity for investors wanting to enter the name.

Growth Prospects

Philip Morris still has plenty of growth ahead of it, and is near the top of its industry. When I say industry, I am comparing Philip Morris to the same four names I always have: Altria Group, Inc. (NYSE:MO), Lorillard, Inc. (NYSE:LO), Reynolds American (NYSE:RAI), and British American Tobacco (NYSEMKT:BTI). The first table I will present shows the currently expected growth, by analysts, for revenues and earnings for each, and a two-year combined total.

Since my last update, Altria's revenue forecast has been ticked up 0.1% (0.1 percentage points, all percents below are percentage points) for 2013, and British American's 2012 revenue estimates were taken down 0.3%, along with a 0.5% cut in 2013 estimates. The three other names have not seen any revenue revisions.

On the earnings per share front, analysts have raised Philip Morris' 2013 estimate by 0.2%, increasing the two-year total by a similar amount. Lorillard has seen it's 2012 number hiked by 0.2%, and its 2013 number raised by 0.4%. Altria has seen its 2013 number raised by 0.5%. Reynolds American has seen its 2013 estimate cut by 0.4%. British American has seen its 2012 earnings growth number cut by 1%, and its 2013 number cut by 2.9%.

Overall, Philip Morris shows the second highest amount of growth potential in this space. But while it does trail Lorillard in terms of 2012 growth estimates, Philip Morris is expected to post more growth than Lorillard in 2013.

Valuations

Philip Morris has traded at a premium to these other names for a while, because investors love it. While the company's dividend isn't as much as the others currently, investors are waiting to hear on a dividend raise that should come soon. Secondly, Philip Morris is buying back a tremendous amount of stock. The company is currently buying back $1.5 billion of stock per quarter, and that pace is expected to continue for the next couple of years.

So when it comes to valuations, the following table does show that Philip Morris trades at a premium on both price to sales and price to earnings metrics. Now since my last update, the valuations have come down slightly for each as the stocks have declined by a few percent here and there. For example, Philip Morris' 2013 P/E has dropped by 0.2 since my last analysis, and Lorillard's has come down by 0.12. The premium Philip Morris has traded at has roughly stayed the same compared to the other names since my last update.

Analyst Opinions

Now the last time I updated analyst opinions was back in my July article. At that time, Philip Morris was rated by analysts, on a 1 to 5 scale, as a 2.3, implying a slight to moderate buy. Analysts at that time believed Philip Morris was the best buy in the space. They also saw middle of the road upside compared to the other names. The following table shows where analysts stand now. Remember, a 1 rating is a strong buy, whereas a 3 is neutral. The target is the average (mean) price target from analysts, and the upside category is the change from the current price to that average target.

Analysts now see Philip Morris as the second best buy, but there only appear to be two analysts covering British American as opposed to 16 analysts covering Philip Morris. Analysts still see some upside in PM, although slightly less than they did a few months ago.

Time to bottom?

In my last article, I noted that Philip Morris had four significant pullbacks from high points since it crossed $90 for the first time in April. Each of these pullbacks was at least $4, with an average of about $5.90 each time ($4.57 if you exclude the near $10 pullback).

Now, since Philip Morris has hit its recent 52-week high, how much do you think it has declined? Well, the answer is $4.51. Now, I'm not saying this stock will bottom again today, tomorrow, or any day in particular, but the numbers say we are close. I've always recommended buying this name on pullbacks, and that has been an extremely successful strategy. Remember, with the company buying back $1.5 billion in shares per quarter, the company will come in and buy when shares are low, so there can be a bit of a floor in the name.

Conclusion: Time to buy again

I said in my last article that my "perfect entry price" for Philip Morris was at 14.75 times 2013 earnings, which at that point was $84.81. However, Philip Morris just hasn't gotten this low, and I'm not sure investors will get in at that "perfect price" unless we get a big market sell-off. Thus, I am raising the "perfect entry price" valuation to 15 times 2013 earnings, which means the best entry price would be $86.40 given current estimates. However, if investors don't think that Philip Morris will get that low, and they want to assure a position in the name, I would suggest entering at 15.25 times 2013 earnings, which would be $87.84, or $1.25 below where we closed on Wednesday.

Recent history shows that this pullback may be nearing an end. Philip Morris is still an attractive growth story, showing above industry average growth. The company boasts a solid dividend - which is expected to be raised soon. Billions in stock buybacks will continue for the indefinite future. Philip Morris does trade at a premium to other names in the space, but that has been the case in recent years. Investors still seem willing to pay that, since the stock recently hit a new high. With this latest decline in share price, long-term investors should take advantage, buying here and accumulating if shares decline further.

Source: Philip Morris Approaching The Sweet Spot