Five Tobacco Stocks to Buy

Most investors consider cigarette companies as utilities that generate steady cash flow streams over the years. It is true that some small and large investors refrain from investing in “sin” stocks such as tobacco stocks, but there are several strong reasons for investing in this group of equities. Cigarette companies operate in an extremely regulated industry with high barriers of entry, which somewhat protect the revenue streams generated by incumbent companies. Moreover, tobacco companies usually have very loyal customers, who do not give up smoking even during periods of economic hardship. Customers around the world are fully aware of tobacco’s harmful health effects, which makes us believe that global smoking rates will continue to decline in the upcoming decades. According to Euromonitor, approximately 20% of the global population is still smoking, down from 22% in 2005. However, the tobacco industry is not anticipated to decline forever, considering the industry’s strong focus on research and technology. Cigarette companies have been working on developing a wide portfolio of smoking alternatives, such as electronic cigarettes and chewing tobacco, which have already unlocked new revenue streams. The transition to allegedly less harmful smoking products will enable tobacco companies to continue growing in the years ahead. Surprisingly or not, cigarette companies are on a tear, so let’s take a look at five most-favored tobacco stocks in the hedge fund industry.

Let's look those five tobacco stocks: BTI, VGR, RAI, PM, MO


Source: Insider Monkey