Despite being on the receiving end of stringent ESG standards, tobacco stocks have been significant wealth creators for investors over the past few decades. Since last year, high inflation has affected cigarette sales. However, with inflation easing considerably from last year’s peak, cigarette sales are likely to grow.
Amid this backdrop adding fundamentally strong tobacco stocks Altria Group, Inc. (MO – Get Rating), British American Tobacco p.l.c. (BTI – Get Rating), and Vector Group Ltd. (VGR – Get Rating) to one’s watchlist could be wise.
Before diving deeper into the fundamentals of these stocks, let’s take a closer look at the state of the tobacco industry.
The tobacco industry faces several challenges, such as declining smoking rates, high inflation, government regulations, health-related concerns, etc. On the other hand, tobacco companies are developing newer, less risky offerings such as snus, e-cigarettes, vaporizers, etc.
E-cigarettes are sweeping the globe because they provide a smoking-like experience with significantly less harm. E-cigarette use grew nearly 6% last year compared to 4.9% in 2021. High inflation has been a major challenge for the tobacco industry. The consumer price index for May rose 4% year-over-year, the lowest in nearly two years. The rapidly cooling inflation could boost tobacco consumption.
The tobacco market is projected to grow at a…
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