1. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 102
With sales of cigarettes in almost 170 countries, Philip Morris International Inc. (NYSE:PM) is one of the biggest tobacco firms in the world. The company aims to replace its cigarette sales with lower-risk alternatives despite its supremacy. Although its target of two-thirds of sales by 2030 seems ambitious, as of 2024, almost 40% of revenue came from smoke-free items. By 2029, Morningstar analysts anticipate that this percentage will have increased to about 50%. This does not indicate that analysts expect PMI to underperform in reduced-risk, but rather the consistent and significant contributions from traditional smokeable items. The stock grew by more than 39% YTD, making it the Best Tobacco Stock.
The smoke-free products of Philip Morris International Inc. (NYSE:PM) were sold in 95 markets as of December 31, 2024, and 38.6 million adults globally were estimated to be using them. The smoke-free division of the company generated 42% of its total net revenues in the first quarter of 2025. Despite the secular drop in smoking worldwide, combustibles expanded 4%, while smoke-free grew 20% organically. The investment management company, Andvari Associates, published its investor letter for the first quarter of 2025. The fund said as follows:
“Last year, Andvari made its first investments in tobacco companies with the purchase of Philip Morris International Inc. (NYSE:PM) and Altria. At the time of our purchase, Philip Morris and Altria had underperformed the S&P 500 over the prior 5- and 10-year periods. Both traded at low valuations and with high dividend yields. But thanks to following the industry on and off for 10+ years, and thanks to many discussions with long-time shareholders of the companies, Andvari felt the time was right to make the plunge. The timing could not have been much better for us, as both companies have so far contributed positively to Andvari’s recent overall performance.
The problem—or the feature, depending on your perspective—with the tobacco industry has been a declining population of cigarette smokers in developed countries. Over the last four or five years, the decline in these smoking populations has accelerated, which in part explains the poor share performance of the tobacco companies between 2017 and 2023. Despite this, the tobacco companies have maintained, or slowly increased, their revenues and profits with regular price increases on cigarettes…” (Click here to read the full text)
Overall, PM ranks first among the 10 Best Tobacco and Cigarette Stocks to Buy Now. While we acknowledge the potential of tobacco and cigarette companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than PM but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. 10 Best Tobacco and Cigarette Stocks to Buy Now is originally published on Insider Monkey. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
