BAT’s historical strength has been in cigarettes, and the company claims several major brands. Historically, BAT’s most popular worldwide brands were Dunhill, Kent, Lucky Strike, Pall Mall, and Rothmans. When BAT acquired Reynolds American, though, it brought the lucrative Newport and Camel brands under the corporate umbrella. In addition, Reynolds stock market myths American’s Natural American Spirit premium brand became part of the British American portfolio. British American Tobacco is a fully integrated tobacco business with global scope. With the acquisition of Reynolds American several years ago, BAT became a global powerhouse, with a sizable market share in the U.S. as well as in key overseas markets.
An increasing number of U.S. states have significantly raised the tax on cigarettes to reduce their budget deficits, and to reduce the potential appeal of smoking for consumers. Given the propensity of localities to use tax increases on cigarettes, the situation will likely only get worse for tobacco stocks. This makes Philip Morris the world’s 79th most valuable company by market cap according to our data. The market capitalization, commonly called market cap, is the total market value of a publicly traded company’s outstanding shares and is commonly used to measure how much a company is worth. Until 2018, Pyxus was called Alliance One International, and its primary business was in producing and distributing leaf tobacco.
Like Altria, Philip Morris saw a decline in its cigarette sales volume in 2021, by about 0.6%. But its sales volume of heated tobacco units (HTUs) rose 24.8% in that same year, indicating that devices such as the IQOS have strong growth potential. In the first quarter of 2022, the company’s cigarette sales volumes increased 1.9% due to a post-Covid recovery in some markets while HTU sales increased 14.2%. Philip Morris finished the first quarter of 2022 with 17.9 million IQOS users.
Publicly Traded Tobacco Products Companies – SIC Code 21
The company also sells a wide range of products, including cigarettes, vaporizers, chewing tobacco, and heated tobacco. Buying shares of BAT is the easiest way to gain portfolio exposure to the whole tobacco industry via just one stock. While Altria has looked outside of the company to diversify and cushion itself from the decline of cigarette sales, Philip Morris is pursuing an in-house strategy. The company — which sells many of the same brands that Altria does except outside of the U.S. — has pinned its hopes on heat-not-burn (HNB) tobacco products.
- Prior to being based in Virginia, Philip Morris had its headquarters in Midtown Manhattan, New York City. In 2003, Philip Morris announced that it would move its headquarters to Virginia.
- Tobacco has been a big business in the United States for more than a century.
- These are the top tobacco stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth.
- But its sales volume of heated tobacco units (HTUs) rose 24.8% in that same year, indicating that devices such as the IQOS have strong growth potential.
Given the need for discount cigarette options, customers seem likely to keep buying Vector products even as overall interest in the industry wanes. New Valley also has extensive assets in the Las Vegas area to go with its major presence in New York City, Miami, and Los Angeles. Ultimately, as discussed above in the section on the risks of tobacco stocks, regulators are likely to decide the fate of the tobacco industry, so future interest in the stocks may fade. The top tobacco stocks for 2023 include British American Tobacco PLC, Vector Group Ltd. and RLX Technology Inc., which lead rivals for best value, fastest growth, and best performance, respectively. Altria has taken three writedowns on its Juul investment, and, as of September 2020, the stake was valued at just $1.6 billion. And, for its part Universal is attempting a transition to a producer of fruits, vegetables, and ingredients which the company hopes will diversify its business and provide renewed growth.
Japan Tobacco Group
The company’s offerings include cigarette papers and make-your-own cigar products, pipe tobacco, chewing tobacco, moist snuff, and next-generation vapor products. Turning Point has also built up a new business around cannabidiol, with the non-active ingredient in cannabis having drawn a lot of attention for potential favorable medical properties. Investors may want to consider investing in a basket of tobacco stocks to gain exposure to different growth strategies and cut down on risk. While income investors can still count on tobacco companies to deliver dividends, the path to growth in the industry is uncertain. The advantage of investing in British American Tobacco over Altria and Philip Morris is that it provides exposure to the tobacco sector worldwide rather than in just the U.S. or just internationally.
Yet Altria has an increasingly wide scope that includes a number of tobacco and non-tobacco businesses. The company’s smokeless tobacco division includes well-known brands like Copenhagen and Skoal, which together control more than half of the U.S. smokeless tobacco market. Michelle Wine Estates division brings an alcohol component to the conglomerate’s overall operations, although the premium wine company makes up just a tiny portion of Altria’s total sales. Almost all of Altria’s sales come from the United States, where smoking rates have steadily declined over the past generation.
By working closely with tobacco farmers around the world, Alliance One was able to boost productivity and address industry problems like child labor and waste of natural resources in the growing process. The company also provides services to its contractors, offering its agricultural expertise to help solve problems and boost yield and quality. Its processing and blending facilities also help improve the quality of the end products it sells to consumer goods companies. Vector Group isn’t as well-known as its peers in the U.S. cigarette manufacturing business, but the company plays a significant role in the industry. As the fourth-largest cigarette manufacturer in the U.S., Vector’s Liggett Group subsidiary is the company behind key discount cigarette brands like Pyramid, Grand Prix, Eve, and Eagle 20’s.
There aren’t very many major tobacco companies available on U.S. markets, as consolidation across the industry has concentrated control of the tobacco business into the hands of a small number of companies. Nevertheless, the companies that remain have seen good investment results on the whole, and even with the challenges that face the tobacco industry, the prospects for those businesses remain favorable. Universal offers investors a compelling mix of growth and income, with a dividend yield approaching 5% and solid share-price gains that compare well against companies like Philip Morris fibonacci extension levels and British American. With a strong combination of a leaf tobacco business that’s likely to survive for a while and more innovative efforts to capture new opportunities, Universal’s doing things the right way. British American Tobacco (BAT) has become a titan of the industry as well, fueled by its $49 billion acquisition of Reynolds American in 2017. Today, the company owns a range of popular cigarette brands, including Camel, Newport, Dunhill, Natural American Spirit, and Lucky Strike, as well as next-gen products such as Vuse for vaporizing and glo for heat-not-burn smoking.
The latter was founded in 1873 and continues to operate today as the Liggett Group, while the real estate business came later. Tobacco stocks are widely prized by income investors thanks to their high dividend yields, stable payouts and dividend increase streaks. However, declining customer counts and usage rates are weighing on the group. Altria Group, Inc. (previously known as Philip Morris Companies, Inc.) is an American corporation and one of the world’s largest producers and marketers of tobacco, cigarettes, and related products. It operates worldwide and is headquartered in Henrico County, Virginia, just outside the city of Richmond.
Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. Vector Group has exhibited a volatile performance record and has failed to grow its earnings-per-share meaningfully over the last decade.
The Complete List of Tobacco Stocks on the NYSE
The most important result of that initiative has been IQOS, Philip Morris’ heated tobacco system. Rather than burning tobacco, IQOS raises its temperature enough for the tobacco to give off vapors without combusting. The vapor contains nicotine, so it satisfies smokers’ craving for the drug in the same way that traditional cigarettes do. However, Philip Morris International has done studies that show that far fewer harmful chemicals are produced in the heating process, and it believes that the product is safer as a consequence. Taking into account their market caps, it’s clear that three of these companies are huge players in major tobacco markets.
Various e-liquid businesses offer multiple ways to profit from the rise of vaping as well. Pyxus is the smallest company on this list, but it’s picked up a following among investors — largely because of the breadth of its business. Like Universal, Pyxus takes an agricultural approach to the tobacco industry.
The 9 biggest tobacco stocks on major U.S. exchanges
According to the federal Centers for Disease Control and Prevention, the percentage of U.S. adults who smoke tobacco fell from 21% in 2005 to 14% in 2018. In the first quarter of 2022, cigarette sales continued to decline, falling 6.3% from the first quarter of 2021 to 20.6 billion. The tobacco industry may be reviled by some, but it has been a big winner for investors for much of its history.
Companies with EPS or revenue growth of over 1,000% have been excluded as outliers. Below, we look at the top tobacco stocks based on value, growth, and performance. Benchmark figures above are as of May 26, and all data below are as of May 23, 2023. Tobacco stocks as a group can be represented by the AdvisorShares Vice ETF (VICE), an exchange-traded fund, although VICE also holds a variety of other sin stocks besides tobacco companies. VICE has returned about 1% in the last year, while the Russell 1000 Index has increased by 3%. It has raised its dividend 56 times in the past 52 years, effectively making it a Dividend Achiever (an unofficial status because of its spinoff history).
With a few exceptions, all manufacturing, commercial, and executive employees had long been based in and around Richmond. Currently the company is headquartered in an unincorporated area within Henrico County, less than five miles west of the city limits of Richmond and less than ten miles from its downtown pips trading Richmond campus. As of the date this article was written, the author does not own any of the above stocks. Tobacco companies, which sell addictive wares, generate predictable cash flows. This can capture investor interest because it means strong dividends that hedge against rising inflation.
Closer to home, Altria Group has the largest U.S. market share of any tobacco company, at just under 50%. Its cigarette business makes up the dominant portion of its overall sales, and the Marlboro brand is a key driver of its overall success, with a 43% market share all by itself. Other premium cigarette brands, as well as discount cigarettes and a line of cigar products, flesh out Altria’s smokeable products division.