Top Tobacco Stocks for Q4 2022

Investing News

The tobacco industry includes companies that grow, produce, and sell tobacco and related products such as cigarettes and e-cigarettes. Sometimes called sin stocks, tobacco companies are avoided by some investors, including ones who focus on socially responsible investing. The biggest tobacco companies include Philip Morris International Inc. and Altria Group Inc., both of which sell products with dominant brand names.

Over $1 billion worth of tobacco was produced in the U.S. in 2021. Earlier in the year, the U.S. Food and Drug Administration (FDA) proposed to ban both flavored cigars and menthol cigarettes. The ban could reduce the number of tobacco-related deaths each year, which currently stands at over 480,000.

Tobacco stocks as a group have outperformed the broader market. The benchmark MSCI ACWI Tobacco Index has posted a 1-year trailing total return of -1.5% compared with the Russell 1000’s total return of -13.1%. These market performance numbers and all statistics in the tables below are as of Sept. 15, 2022.

Here are the top 3 tobacco stocks with the best value, fastest growth, and most momentum.

These are the tobacco stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Best Value Tobacco Stocks
  Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
RLX Technology Inc. (RLX) 1.22 1.9 3.6
Imperial Brands PLC (IMBBY) 22.27 21.2 7.7
Vector Group Ltd. (VGR) 9.18 1.4 8.6

Source: YCharts

  • RLX Technology Inc.: RLX Technology is a China-based company focused on e-vapor products and services. The company engages in scientific research, technology, and product development, distribution, and related services. In late July the company reported that one of its subsidiaries had obtained a License for Manufacturing Enterprise from the Chinese government to make RELX branded e-vapor devices and related products. The approved manufacturing capacity is for over 15 million rechargeable devices and nearly 329 million cartridge products per year through July 31, 2023.
  • Imperial Brands PLC: Imperial Brands is a U.K.-based consumer goods company. It sells cigarettes, smokeless tobaccos, papers, and related products. Its products are available throughout the world.
  • Vector Group Ltd.: Vector Group is a holding company that, through its subsidiaries, manufactures and markets cigarette products. The company is also involved in real estate projects through one of its subsidiaries. Vector reported Q2 2022 earnings results on Aug. 4, including significant decline net income year-over-year (YOY) even as revenue rose. Net income was affected by an investment in the company’s Montego brand.

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. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with EPS or revenue growth of over 2,500% have been excluded as outliers.

Fastest Growing Tobacco Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
Universal Corp. (UVV) 49.23 1.2 3.9 22.8
Philip Morris International Inc. (PM) 94.04 145.8 2.9 3.1
Vector Group Ltd. (VGR) 9.18 1.4 -58.3 14.7

Source: YCharts

  • Universal Corp.: Universal operates a tobacco business and an ingredients business. Its tobacco operations include processing and shipping of leaf tobacco to manufacturers of tobacco products. Its ingredients business offers a range of plant-based ingredients. On Aug. 3 Universal announced a quarterly dividend of $0.79 per common share. The dividend is payable Nov. 7 to shareholders as of Oct. 10, 2022.
  • Philip Morris International Inc.: Philip Morris International is a global tobacco company. It offers cigarettes as well as smokeless tobacco products, including heat-not-burn, vapor, and oral nicotine products.
  • Vector Group Ltd.: See above for company description.

These are the tobacco stocks that had the highest total return over the last 12 months.

Tobacco Stocks with the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
British American Tobacco PLC (BTI) 39.36 88.5 13.7
Imperial Brands PLC (IMBBY) 22.27 21.2 10.0
Universal Corp. (UVV) 49.23 1.2 6.6
Russell 1000 N/A N/A -13.1
MSCI ACWI Tobacco Index N/A N/A -1.5

Source: YCharts

  • British American Tobacco PLC: British American Tobacco is a U.K.-based consumer goods company that offers tobacco and nicotine products. In addition to its traditional tobacco business, the company also offers vapor products, tobacco heating products, and modern oral products. On Sept. 6, the company announced that a year-long study indicated lower risk for users of the company’s glo product compared to people who continued smoking. American Tobacco’s glo is a Tobacco Heating Product (THP). It uses a device to heat, instead of burn, tobacco, often using an electronic device.
  • Imperial Brands PLC: See above for company description.
  • Universal Corp.: See above for company description.

The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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