5 Tobacco Stocks To Buy Right Now

In some ways, cigarette consumption has trended lower in developed countries. Stricter regulations on sales have been enacted in different states to curb consumption. According to a new Federal rule, e-cigarettes and other such similar devices will now be more regulated. The industry also faces sluggish global macroeconomic conditions and currency related headwinds. With that said, the developing world is still a growth market for big tabacco, as the twin tailwinds of rising population and increasing disposable income power gains. Due to demand from the developing world, the tobacco industry is expected to continue to grow in the future, although at a slower rate. Below we look at some of the tobacco stocks which could benefit from this trend.

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Philip Morris International Inc. (NYSE:PM) continued to be the top tobacco stock among the hedge funds that we track, though the number of funds with Philip Morris International Inc. (NYSE:PM) in their portfolios inched down by 2 to 45 during the third quarter. The value of their holdings also came down to $4.51 billion from $4.61 billion quarter over quarter. Although Philip Morris International reported a decline of more than 5% in cigarette shipment volumes for the period ended September, analysts estimate that the company will grow its EPS by an average of 7.84% annually for the next five years. Its dividend yield is attractive at 4.7%. Amongst the largest movers were Two Sigma Advisers and Maverick Capital Ltd buying 1,375,054 and 1,089,868 shares, respectively, during the quarter.

Click next to see info on the other four tabacco stocks on our list.

Altria Group Inc (NYSE:MO) is a holding company whose subsidiaries include Philip Morris USA Inc, John Middleton Co. and UST LLC. The net profit margin for the quarter ended September stood at 15.8%, declining from 20.6% in the year ago quarter. The stock is up more than 13% year to date and has a mean overweight rating. Altria Group Inc. (NYSE:MO) has a pretty good dividend yield of 3.81%. As per our database 40 funds held shares worth $1.77 billion of this stock at the end of the third quarter. They held 1.4% of the company’s float as of September 30^th. Top buyers of this stock include Renaissance Technologies and Arrowstreet Capital which increased their stakes to 0.32% and 1.31% respectively of their total 13 F holdings.

Reynolds American, Inc. (NYSE:RAI) saw the aggregate value of elite fund holding as per our database decline by 27.3% during the June-September period. The number of funds having Reynolds American, Inc. (NYSE:RAI) in their portfolios also came down by 1 to 39 in the third quarter. Alliancebernstein and Millennium Management bought large number of shares of Reynolds American, Inc. (NYSE:RAI) during the third quarter. The stock formed 0.16% and 0.19% of these funds’ total 13F portfolio respectively, by the quarter end. Reynolds American stock shot up in October in light of an acquisition offer from British American Tobacco PLC (ADR) (NYSEMKT:BTI). The deal has been rejected by Reynolds American, Inc. (NYSE:RAI) as per unconfirmed reports.

British American Tobacco PLC (ADR) (NYSEMKT:BTI) witnessed the number of funds holding the stock inch up slightly by 1 to 16 during the third quarter. As per our records, they held $638 million of the company’s stock as of September 30^th, compared to 15 funds holding $641 million in the quarter earlier. Some of the famous long holders include Arrowstreet Capital and Jim Simon’s Renaissance Technologies who bought 54,748 and 49,200 shares of this stock respectively during the third quarter. The stock has returned more than 26% in the last five years and has a dividend yield of almost 4%. Post the company’s $47 billion offer to buy Reynolds American, Inc. (NYSE:RAI), its stock price declined by around 12% in the last three months.

Vector Group Ltd (NYSE:VGR) saw the number of funds that we track and are bullish on the stock decline to 10 from 15 in the second quarter. The value of their holdings decreased to $164 million from $187 million quarter over quarter. Renaissance Technologies and McKinley Capital Management were notable buyers, having added 241,966 shares and 106,680 shares of the company, respectively. The company has an astoundingly high 7.78% as dividend yield. Though Vector Group Ltd (NYSE:VGR) predominantly deals in cigarettes, it also has a real estate arm which is growing fast. In its recent quarterly results, Vector Group Ltd (NYSE:VGR) reported $0.19 earnings per share, beating estimates by $0.03. Revenues stood at $459 million during the September quarter, which was also above the consensus estimate of $433 million. The stock has an average rating of buy.

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