Japan Tobacco (OTCPK:JAPAY)
Japan Tobacco is the third-largest tobacco company globally. It owns a rich brand portfolio including Winston (non-U.S.), Camel (non-U.S.), and Mevius, and holds leading shares in many core markets including Japan, Russia, and the U.K. It has added Logic as a vaping brand and Ploom/PloomTech heated tobacco lines into its reduced-risk-product portfolio. The tobacco business contributes 90% of group sales and nearly all profits, with more than half generated by JTI, the overseas tobacco arm. JTI was created through the acquisition of R.J. Reynolds’ non-U.S. operations in 1999 and further expanded through multiple acquisitions, of which the purchase of Gallaher in 2007 was the most notable, doubling JTI’s sales. Pharmaceutical and processed food operations are the other businesses.
Swedish Match AB is primarily a smokeless tobacco company. It does not sell cigarettes. Its products include snus, moist snuff, chewing tobacco, cigars, and lighters and matches. Swedish Match’s largest markets are Scandinavia and the United States, which collectively account for roughly 85% of the company’s total revenue. Key brands include general (snus), longhorn (moist snuff), red Man (chewing tobacco), garcia y vega (cigars), and cricket (lighters). The company produces its products in Sweden, the United States, the Dominican Republic, Brazil, the Netherlands, and the Philippines.
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RLX Technology (NYSE:RLX)
RLX Technology Inc is engaged in the manufacturing of e-vapor products for adult smokers. It has an integrated offline distribution and “Branded store plus” retail model tailored to China’s e-vapor market.
Philip Morris Intl (NYSE:PM)
Philip Morris International is a leading international tobacco company engaged in the manufacture and sale of cigarettes and other nicotine-containing products in markets outside the United States. Through multidisciplinary capabilities in product development, state-of-the-art facilities, and scientific substantiation, the company aims to ensure that its smoke-free products meet adult consumer preferences and rigorous regulatory requirements. Management’s vision is that these products ultimately replace cigarettes.
Altria Group (NYSE:MO)
Altria comprises Philip Morris USA, U.S. Smokeless Tobacco, John Middleton, Ste. Michelle Wine Estates, Nu Mark, and Philip Morris Capital, although the company plans to wind down Philip Morris Capital by the end of 2022. It holds a 10.2% interest in the world’s largest brewer, Anheuser-Busch InBev. Through its tobacco subsidiaries, Altria holds the leading position in cigarettes and smokeless tobacco in the United States and the number-two spot in machine-made cigars. The company’s Marlboro brand is the leading cigarette brand in the U.S. with a 43% share in 2020.
Tobacco stocks have historically produced robust returns. But a societal shift toward healthier lifestyles and the understanding of tobacco’s effects have led to greater regulation and litigation — and both affect the value of tobacco stocks.
Companies now looking to phase out traditional products and replace them with healthier, lower-risk alternatives opens the tobacco industry to new players.
Take a look at Benzinga’s list of some of the best tobacco stocks before you invest.
Overview: Best Tobacco Stocks
The tobacco sector has been a cash cow for the biggest players. Top stocks have consistently paid attractive dividends while offering share-price appreciation. But now these businesses are in a period of transition. Knowledge of the adverse effects of smoking, changing consumer tastes and increased regulations all contribute.
The industry now leans toward reduced-risk products like vaporizers and e-cigarettes. Some players look beyond tobacco to partner with cannabis companies. Altria, for example, is trying to help position Cronos (TSE: CRON) as a leader in the U.S. cannabis market.
Despite predictions of the industry’s decline, tobacco stocks still appeal to investors. Historically reliable dividends and profits combined with next-generation products may result in stronger growth.
Best Online Brokers for Tobacco Stock
Online brokers provide the platforms, powerful tools and comprehensive resources to learn, track and trade the top tobacco stocks on major stock exchanges.
Here’s a list of online brokers to elevate your trading experience.
Features to Look for in Tobacco Stocks
Focus on these features when you choose tobacco stocks:
- U.S. or international market exposure: You can choose pure-play stocks that offer exclusive U.S. market exposure or those that provide international market exposure. British American Tobacco, for instance, gives you exposure to both the U.S. and international market. Altria Group is a big player in the U.S. tobacco market.
- Diversified business exposure: The tobacco industry is risky. You might feel uncomfortable investing in companies that bet on the long-term sustainability of initial business models.
Consider companies that cultivate diversification among holdings. Altria, for instance, has a wine business — Chateau Ste. Michelle Wine Estates, which gives it exposure to the alcohol industry. Vector Group (NYSE: VGR) also owns a real estate subsidiary — New Valley.
- Next-generation products: The future of the industry is moving toward smoke-free products like e-cigarettes and vaporizers. The best companies have a portfolio of reduced-risk products and research into next-generation products.
Are Tobacco Stocks Worth Buying?
The tobacco industry boasts strong companies that are objectively stable with high yields. The best performers are usually the most stable, own the largest market share and have an eye on the horizon. While growth and returns are never guaranteed, you should play to win — always stay abreast of developments in the regulatory space.
And if you’re in the market for bargain stocks, take a look at our lists of stocks under $20, stocks under $10 and even stocks under $5. You can find more Consumer Defensive stocks, updated daily, on Benzinga's Best Consumer Defensive Stocks listing, too. Ready to buy Tobacco stocks? Look no further than Benzinga's picks for the Best Online Brokerages. Once you set up an account, you'll be ready to buy tobacco stocks. Take a quick peek at our rankings.