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Altria A Better Stock Play Than Phillip Morris companies where it hurts, with more of them signaling disappointing results than at any time over the past decade. Many bellwether companies have come out in recent days with profit warnings, and the slowing in Europe has been cited as a major factor for those outlooks. Both Pepsi (NYSE:PEP) and FedEx (NYSE:FDX) have warned in the past few days. This indicates that it would be wise to be underweight multinationals with inordinately large exposure to Europe. The predominant stock safe haven of tobacco stocks are also being affected by this scenario. This is pushing more money managers to reduce holdings in Phillip Morris and being overweight Altria Group. Philip Morris International Inc. (NYSE:PM) again lowered its full-year earnings forecast, citing prevailing currency-exchange rates, while the tobacco company also warned of weaker volume trends in the European Union. The company now expects a currency headwind of about 25 cents a share for 2012, compared with a currency benefit of 19 cents a share last year. PM sees a soft second-quarter performance in the EU, reflecting significant quarterly erosion in total industry volume in southern Europe, particularly in Spain and Italy. The region is undergoing a severe economic crisis, and high levels of unemployment were particularly distressing, as lower disposable income can lead customers to trade down and lead to increased counterfeits of established brands and other illicit trade. Though strong demand in Asia, the company's biggest market by volume, has boosted earnings in recent quarters, the mature European market remains a critical part of the business. Cigarette volume in the European Union contributed 23% to Philip Morris's total shipments last year. PM has plans to develop three new products that can reduce the health risks of smoking but these products will not be ready until 2016. PM did unveil a new three-year share-repurchase plan totaling $18 billion, the latest move to return more cash to shareholders. Dividend yields, share repurchases and strong cash flows have driven investors to tobacco stocks of late. which keeps revenue clear of European exposure. cigarette market is in decline, MO is moving to more higher margin smokeless tobacco products for future growth. MO is pushing through a six-cent per-pack price increase across all the tobacco producer brands. The maker of Marlboro and L cigarettes will enact the price increase effective June 18. The move, a sign tobacco continues to command strong pricing power, is the first round of pricing action a producer has taken this year. Analysts see MO revenues rising over 3% in 2012, as higher pricing, line extensions and new product introductions are offset by declining consumption. Altria reaffirmed its 2012 full-year guidance for adjusted diluted EPS to be in the range of $2.17 to $ 2.23, representing a growth rate of 6% to 9% from an adjusted diluted EPS base of $2.05 per share in 2011. Mo has a current dividend yield of 4.84% with dividend s being increased 7.9% in the past year. While both of these tobacco stocks are considered long-term buys, MO will perform best in the next year or so. PM will continue to face headwinds from currency exchange rates and the European crisis which may linger for years. Many astute money managers are moving money from PM to MO until the headwinds die down for PM.