Among international tobacco companies, Philip Morris International (NYSE: PM) is the best known in the U.S., with competitors like British American Tobacco (NYSEMKT: BTI) taking a back seat to the seller of the key Marlboro brand overseas. Philip Morris stock has had a good run since it first became an independent company in 2008, but the past couple of years have left the tobacco company behind, with shareholders having to make do with a solid dividend yield of around 5% even as the stock's price has slumped. Even with the challenges it faces, Philip Morris has bright prospects that could justify buying shares. Let's look at three of the key factors that could push Philip Morris International higher.

1. An end to the dollar's strength would immediately help Philip Morris
Right now, Philip Morris International stock trades at about 17 times its annual earnings over the past year. Yet the strong U.S. dollar has dramatically reduced the company's earnings, as the lion's share of the company's revenue comes in the form of foreign currencies whose values aren't tied to the dollar and have fallen compared to the greenback.

To illustrate the potential impact of a reversal of the dollar's gains, turn to Philip Morris International's most recent earnings report. In the report, the company said it believed that the strong dollar would result in a reduction of about $1.15 per share in earnings for the full fiscal year. If you apply the same earnings multiple to that amount and assume that the dollar will eventually give back its gains, restoring that $1.15 in earnings per share would send the stock price higher by nearly $20 per share, or almost a 25% gain from current levels.

A pullback in the dollar's rise is far from a certainty. Yet over the long run, currency cycles tend to even out, so eventually, investors could see Philip Morris recover some of its lost earnings from recent years.

2. Success with its reduced-risk product portfolio could vault Philip Morris ahead of its rivals
Philip Morris recognizes the value of diversifying beyond its core products, especially as popular opinion makes coming up with alternative products more lucrative. Because of this, Philip Morris has spent billions of dollars on the research and development of what it calls "reduced-risk products," which the company hopes will be subject to less regulatory scrutiny and be more attractive to health-conscious consumers.

Specifically, Philip Morris has gone in two distinct but compelling directions. One set of products focuses on delivering nicotine through different methods, such as e-cigarettes and similar vapor products. The other takes tobacco as its base ingredient, but rather than having consumers burn it as they would with a cigarette, Philip Morris is working on products that merely heat the tobacco. The tobacco giant's hope is that heat-not-burn products will give users the same taste experience without some of the harmful chemicals that result from burning.

It's too early to be sure how well-received these new products will be, but initial indications are promising. If these products take off, they could represent a huge growth market for Philip Morris International worldwide.

3. Favorable decisions on regulatory efforts could restore confidence in Philip Morris International's future
Adverse trends in cigarette sales volumes have long been an argument against U.S. tobacco companies, with many believing that Philip Morris could avoid those trends in overseas markets where smoking hasn't seen the same negative popular opinion. Yet Philip Morris has increasingly had to deal with regulatory efforts against smoking in its markets, and many pose a long-term threat to its cigarette business.

For instance, the U.K. recently passed legislation forcing Philip Morris, British American, and their peers to remove branding images from their cigarette packs beginning as early as 2016, mirroring similar legislation elsewhere. Both companies have taken legal action to fight the regulation, arguing that intellectual property law protects their brands from the restrictions. Similar measures in Ireland have also drawn legal scrutiny from industry players.

It's uncertain whether Philip Morris will win in these efforts. Yet if the company can defend itself from these regulations, it could help keep other countries from following suit, and that in turn could boost Philip Morris International's profits for a longer period.

Philip Morris stock hasn't performed terribly, but it also hasn't lived up to its full potential in recent years. If any of these three things happens, then Philip Morris International stock could finally break out of its doldrums and start producing the total returns that shareholders really want to see.

The next billion-dollar Apple secret
Apple forgot to show you something at its recent event, but a few Wall Street analysts didn't miss a beat: There's a small company that's powering Apple's brand-new gadgets and the coming revolution in technology. And its stock price has nearly unlimited room to run for early-in-the-know investors! To be one of them, just click here.

Dan Caplinger owns shares of Apple.

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