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E-cigarettes: a new trend

Most people are not yet familiar with this new trend, however within a small niche it has been raging for a while. It's called "vaping", and consists in getting your nicotine dose not through the old method of smoking cigarettes, but through the new e-cigarettes.
These e-cigarettes don't burn any tobacco; instead they rely on a battery, a vaporizer (atomizer) and a small quantity of liquid containing a mixture of glycerin/propylene glycol, water, a flavor and nicotine. The result is that smoking these electronic cigarettes is pretty close to regular smoking, including the throat hit and the “smoke” (which is vapor, here). For realism, the cigarettes usually even include a LED in their tip, which glows when you inhale.
Although to avoid FDA regulations every seller of these devices states that they are not smoking cessation aids, anyone familiar with them will tell you that many regular smokers will quit totally or partially from smoking the minute they try them. And there are good reasons for doing so, because vaping means its user will inhale a lot fewer noxious chemicals than through regular smoking. Also, vaping is sometimes allowed where smoking is not, and it can also be significantly cheaper than smoking.
Given this reality, it’s not surprising that the few existing companies in this sector are enjoying strong growth. It is then a pity that most of those companies remain private, and a few pink sheet companies in the sector are obvious frauds.
However, VPCO.OB (Vapor corp) seems a real company that might warrant some attention as a play in the sector. It has been showing strong growth with revenue growth in the 50-100% range, and it recently turned profitable (in the June quarter). Also, even though this is a bulletin board stock, the dilution has not been severe as it sometimes happens with these microcap stocks. The stock is presently trading for $0.20, which gives it a market capitalization around $12 million.
One final notice – the sector relies mostly on Chinese suppliers, and the western distributors don’t have intellectual property, so there isn’t much of a moat here. Still, it is a promising sector with a lot of potential growth. It’s also a credible menace to the traditional tobacco sector.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I am long VPCO.OB as a long shot (small position). I intend to keep this position for the long term.