After a brief summer break, we’re back with our monthly stock picks. To be honest, this month’s choice was actually made before we even assigned scores to the stocks we follow. Occasionally, the market presents an opportunity to purchase a great company at a good price. Think Deepwater Horizon oil spill or the Volkswagen emission scandal. A few months after those stories broke the stock prices had rebounded considerably. These events don’t cause lasting damage to really large, successful companies. Recent regulatory changes in the tobacco industry in the United States have created such an opportunity.

Our choice this month is Altria (NYSE: MO). The US government is proposing to reduce the nicotine level allowed in cigarettes to below addictive concentrations. This news sent shares of tobacco companies (considerably) lower as investors sold to take their profits. The question is: does this news pose a serious threat to the future of big tobacco companies. We think the answer is “probably not.” Any large industry faces periodic changes in government regulation and this is no different. Big sugar survived, big pharma survived, big oil survived. Big tobacco will survive. For us, this represents an opportunity to purchase a company at a discount created because many others are selling.

Altria dropped about 17% on the news – a considerable discount if you believe the company continues to have a solid future. With EPS of 7.58 and a P/E of 8.28 they score an impressive 14 when we assign our scores. Oh, did we mention they also announced a 5 cent (8%) dividend hike effective this month? That makes their current dividend yield 4.2%. Not bad for a company that some say was shaken by these new regulations. Large, successful companies find ways to innovate and remain profitable. Altria is no exception.