Tobacco stocks struggle after the U.K. is reported to be looking at adopting packaging laws...

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Beta_Adjusted Comments (50)
 
I've never read it anywhere, but brand loyalty is about more than packaging. People who don't smoke won't understand this but I can tell you that marlborough cigarettes were much smoother (PM/MO) and more pleasant than other brands (for me). Camel/silk cut etc. always gave me headaches and made me feel ill the next day. Imperial Tobacco's cigarettes were disgusting. But that was *my* opinion. A particular brand is an acquired taste ... the consensus amongst sell-side to date has been that plain packaging would cause down-trading rather than any reduction in smokers as a whole, based on various studies to date. Thats my view in which case the beneficiaries will be those companies who have either a huge loyalty based on taste, and who are strong in the discount segment (Imperial Tobacco, JTI in particular). Frankly, as usual, I think this adverse news is a buying opportunity in the sector. LO is my favourite: highest quality franchise, most loyal customers, and yet the cheapest in the sector (except perhaps for JTI). The mind boggles! Both MO and PM are great investments, as are IMT (look at free cash flow yield) and BAT to a lesser extent. JTI is also very attractive but you don't get the yield, and you have to put up with Japanese accounting/management (operationally 1st class management as with this whole industry, but reporting is a pain); there is a nice opportunity here due to sell-off as Japanese government are reducing their stake.
6 Mar, 10:30 AM Reply Like

Beta_Adjusted Comments (50)
 
(and don't forget Swedish match! I'm told Lorillard is benefiting big-time from e-cigarettes; another reason to own the stock as if ~8 - 9% total capital return yield (5.4% divi + share buybacks), 70% upside on 8% WACC DCF was not enough!
6 Mar, 10:32 AM Reply Like

rube123 Comments (115)
 
funny how certain things fall out of favor, but seem to stick around. I havent smoked in 10 years, but , I am the minority..

Long on LO....

all this hype, has been around a long time............

1966
caution-Cigarette Smoking may be hazardous to your health

1970
warning-The SURGEON GENERAL has determined that cigarette smoking is dangerous to your health

6 Mar, 10:33 AM Reply Like

chuck lewis Comments (216)
 
Editor, The Lewis Letter http://www.the lewisletter.com
Only makes it easier to buy MO, RAI on the pullbacks. The great ones with the great divys.
6 Mar, 10:33 AM Reply Like

LonelyInvestor Comments (65)
 
I am sure that Europe will attempt to increase controls over smoking as will Asia. We are probably finished for a while in the US. Rather worry about the worldwide implications for PM, I own MO. MO is US only.
6 Mar, 12:35 PM Reply Like

Sunshine123 Comments (311)
 
I am not worried about MO, RAI or PMI. They will all do well now and in the future. They are not to be counted out by any means.
6 Mar, 11:24 PM Reply Like

tobaccosand Comments (6)
 
Here in Canada, the originators of idiotic anti-display schemes, the big brands got bigger, the small brands got smaller and the new entrant just disappeared.
7 Mar, 03:52 AM Reply Like