2 Good Stocks I'm Considering Buying on This Plunge

The recent market plunge is almost certainly creating investing opportunities. Since pretty much everything is getting cheaper, it can be difficult sorting out the good stuff from the bad.

Anheuser-Busch (BUD) and UST (UST) are two companies that are probably in the good category. I'm putting them on my watch list.

Anheuser, which holds a 48% share of the US beer market, recently received a $70 per share offer from European brewer InBev. The deal is expected to close in the 4th quarter of 2008. As I'm writing, BUD is trading around $64.30 a share, or 8.86% below the offer price. This does not include the dividend payment (probably $0.37 a share), whose ex-date will be in November. A-B shareholders are expected to approve the deal on September 29. Although 19 banks have committed to finance the deal, investors are nervous about the $49 billion price tag, given the credit crisis.

UST, the leading smokeless tobacco maker, received an offer from Altria (MO) for $69.50 a share. The deal is also expected to close in the fourth quarter of 2008. As I'm writing, UST is trading around $66.84, or about 3.98% below the offer price. This does not include the dividend payment (probably $0.63 a share), whose ex-date will be in December. Investors seem to think that this deal is likelier to happen. The price tag is around $11.6 billion.

While both companies are overvalued at the current prices should the deals fall apart, they are decent stocks to own for the long term and will eventually trade higher than today's prices. Both pay good dividends and sell products that tend to do well during tough times.

Disclosure: I hold no positions in any securities mentioned. I am considering buying both stocks, but will wait to see if the market panic will drive their share prices lower.

Comments

[CoverIsBetter:]

Let's see, we are heading into recession and you recommend 2 products that are more addictive than crack :-)
Talk about vertical demand curve.
"What do you want for that, a junior g-man badge?" -Vincent Hanna

What else you got?

2008 Sep 18 09:50 AM

[muguwmper12:]

Okay, so let me see -- you're making a bet with a 3-5% limited upside and unlimited potential downside if the deals fall through. Sounds like smart money to me!

Now, if you wrote this article 6 months ago...

POSITION: Long BUD for past 10 years...sold out at 1/2 at $60 and 1/2 at $66 on purchase offer. No position in UST. Long MO (and PM) for past 5 years.

2008 Sep 18 10:19 AM

[muguwmper12:]

Okay, so let me see -- you're making a bet with a 3-5% limited upside and unlimited potential downside if the deals fall through. Sounds like smart money to me!

Now, if you wrote this article 6 months ago...

POSITION: Long BUD for past 10 years...sold out at 1/2 at $60 and 1/2 at $66 on purchase offer. No position in UST. Long MO (and PM) for past 5 years.

2008 Sep 18 10:19 AM

[nokdzplz:]

Seeking Alpha writes just to see his own writing. He does no research that really is in depth. He just rambles. I was completely turned off by his stupid article when the AB issue first started about the past college days of its CEO. I ask him to reveal to us his own indescritions at that time and wow I am surprised I saw no response. I guess his inflated opinion of his knowledge is all he needs. It just goes to show be careful what you write. You may loose credibility and I know that rambling article last summer sure has turned me off to this publication. I don't care what your personal feelings are on someone and I could care less what you are buying, selling or holding. I will say it again. Do credible research and write an intelligent article that is not "all about me" and maybe someone will read it.

2008 Sep 18 10:44 AM

[nokdzplz:]

I guess I should clear something up before "someone" assumes things. I do not work for either company involved, do not know either family any of their friends or acquaintances involved and do not live in either area involved. I just don't like judgemental people or worse yet published writers who place themselves above others and are not willing to have their lives open for all the readers to judge. That is my only interest in this writer. I feel he is very superficial and has a huge ego. I can do percentage figures myself and I can check the stock price myself. I do not need him to do it for me. He just needs to keep his writing above the elementary school playground name calling. Things that are personal are personal for a reason, the reason??? THEY ARE PERSONAL AND MAKE NO DIFFERENCE IN THE BUSINESS ABILITIES OF YOU, ME OR ANYONE ELSE.

2008 Sep 18 10:57 AM

[Umm, yeah:]

Lol, such harsh commentary! If you hate him so much, stop reading his articles.

It's not an awful play. It comes down to how confident you are in whether these deals will go thru.

2008 Sep 18 11:09 AM

[nokdzplz:]

Excuse me but I do not "hate" anyone. That is absurd. I just do not think this writer is earning the paycheck he is given to do research and I am sure there is someone out there willing to do the "work" and research to write and not just put others down and inflate his own importance to readers. I actually have stopped reading his articles as of last summer and unfortunately for me decided to give him a second chance (as we should do) but once again it was an "all about me" article. "Hate" please!!! I do not know this person so how if I did "hate" anyone would I have that feeling??? This is a reaction to a style of writing I do not agree with and I do not "like" but "Hate" is a very ugly word to apply. No I do not "hate" this person (I do not know) and no I do not "hate" the articles. I just feel his time, my time and others seeking true information can have their time better spent on something relevant. I also feel we all need to be aware that our writing, words and actions make long lasting impresssions on others and we need to choose wisely and carefully what we say, write and do. People unfortunately have long memories for the negative and short for the positive and I am no different. The article last summer was horribly unfair and had nothing to offer anyone by way of information. It was just wrong to bring up very old stories to scrutiny unless the person writing them is willing to open his life up in the same way. My personal feeling is it may just be jealously because of the "wealth" factor. CEO's make more than most journalists'. Jealously is an ugly emotion and should be left out of reporting. Now before you attack me remember I said that is my PERSONAL feeling. I am not saying it is true or not I have no way of knowing the intent behind that article. My only point was positive or nothing is better that anything negative about personal issues. Business is different, we all need to know the good and bad in that aspect but leave personal out of it.

2008 Sep 18 11:45 AM

[DurkABCol:]

His facts are wrong. AB does not vote on the deal sep 29th. Inbev shareholders vote sep 29th. There is no date set yet for AB shareholders to vote. I assume it will be after the gov oks the deal. I hope all AB shareholders vote NO. If you own shares sell now and take your profit. This deal is far from over, there financing might fall through. All kinds of things can happen

2008 Sep 19 08:48 AM

[nokdzplz:]

I think DurkABCol proves my point. If he uses his own money to buy based on incorrect facts he prints I am sure he does no research. If I am correct (which I am not sure about, I am NOT a financial analyst) isn't it Inbev shareholders that vote Sept 29? They are 2 completely seperate sets of shareholders....where does he get his info?

2008 Sep 19 09:26 AM

[User 265730:]

I hope the deal does fall apart , there is something wrong with this deal when Bank of America and Chase Morgan is going to borrow money from our own federal reserve at the low rate of 2% maybe even lower . Then turn around and loan it to InBev so they can buy up the United States.
Lets get our Senators and congress people to attach strings to the loans they are giving out that if the banks are involved in any take over actions of American company’s they don’t get any money.
The AB deal is a risky deal to begin with, the government should say no way to it with the value of the Dollar and the Euro InBev is trying to finance more money than they are worth and it will all be overseas holdings , Why should the American people back the sellout of America, call your congress man and senator ask them to stop this from happing. And yes you are right InBev shareholders vote Sep 29th as an AB shareholder I have got nothing yet more than likely because InBev does not have the terms of the financing finalized yet so it is not a don deal. They have nothing to present to the AB share holders yet.

2008 Sep 19 04:13 PM