5 Best Tobacco and Cigarette Stocks To Buy

In this article, we discuss 5 best tobacco and cigarette stocks to buy. If you want to read our discussion on the tobacco industry, head over to 11 Best Tobacco and Cigarette Stocks To Buy. 

5. RLX Technology Inc. (NYSE:RLX)

Number of Hedge Fund Holders: 17

RLX Technology Inc. (NYSE:RLX) produces, distributes, and markets e-vapor products in China. The company was established in 2018 and is headquartered in Beijing, China. RLX Technology Inc. (NYSE:RLX) is one of the top tobacco stocks to monitor. On August 18, the company reported a Q2 non-GAAP EPS of $0.01 and a revenue of $52.1 million. As of June 30, 2023, the company held a total of $2,177.1 million in cash, investments, and deposits. 

According to Insider Monkey’s second quarter database, 17 hedge funds were bullish on RLX Technology Inc. (NYSE:RLX), same as the prior quarter. Leonard A. Potter’s Wildcat Capital Management is the leading stakeholder of the company, with 18 million shares worth $32 million. 

4. Turning Point Brands, Inc. (NYSE:TPB)

Number of Hedge Fund Holders: 17

Turning Point Brands, Inc. (NYSE:TPB) produces, markets, and distributes adult consumer products. They operate through three segments – Zig-Zag Products, Stoker’s Products, and NewGen Products. The Zig-Zag segment offers rolling papers, cigars, and related accessories under the Zig-Zag brand. Stoker’s manufactures moist snuff and chewing tobacco products, and the NewGen segment distributes vapor products and non-tobacco/nicotine items directly to consumers through VaporFi and VaporBeast brands. Turning Point Brands, Inc. (NYSE:TPB) is one of the best tobacco stocks to buy. The company reported a Q2 non-GAAP EPS of $0.79 and a revenue of $105.6 million, with Zig-Zag and Stoker’s net sales increasing by 1.1% and 7.3%, respectively. 

According to Insider Monkey’s second quarter database, 17 hedge funds were bullish on Turning Point Brands, Inc. (NYSE:TPB), compared to 15 funds in the last quarter. Nathaniel August’s Mangrove Partners is a significant position holder in the company, with 855,723 shares worth $20.5 million. 

3. British American Tobacco p.l.c. (NYSE:BTI)

Number of Hedge Fund Holders: 22

British American Tobacco p.l.c. (NYSE:BTI) is involved in supplying tobacco and nicotine products to consumers worldwide. The company’s products include vapor, tobacco heating, contemporary oral nicotine items, combustible cigarettes, snus, and moist snuff. British American Tobacco p.l.c. (NYSE:BTI) is one of the best tobacco stocks to invest in. The company paid a per share quarterly dividend of $0.7006 to shareholders on November 8. 

According to Insider Monkey’s second quarter database, 22 hedge funds were bullish on British American Tobacco p.l.c. (NYSE:BTI), same as the earlier quarter. William B. Gray’s Orbis Investment Management is the leading stakeholder of the company, with 7.9 million shares valued at $263 million. 

Broyhill Asset Management made the following comment about British American Tobacco p.l.c. (NYSE:BTI) in its second quarter 2023 investor letter:

“In our year-end letter to investors, we explained why we had reduced our investment in Altria and reinvested the proceeds to increase our position in Philip Morris. This quarter, we exited the position completely, swapping our exposure for British American Tobacco p.l.c. (NYSE:BTI), as the valuation gap became too hard to ignore. Investors are rightly frustrated with the stock. In addition to the menthol ban, leadership change, and North Korea kerfuffle. BTI has mountains of debt piled on its balance sheet following the acquisition of Reynolds, which will limit options for capital allocation, namely more buybacks. While we’d love to see new management aggressively repurchasing stock at these prices – shares trade below 7x earnings – we don’t think buybacks are necessary for the investment to work from here.”

2. Altria Group, Inc. (NYSE:MO)

Number of Hedge Fund Holders: 43

Altria Group, Inc. (NYSE:MO) manufactures and sells tobacco products in the United States, including cigarettes, cigars, smokeless tobacco, and oral nicotine pouches. The company was founded in 1822 and is headquartered in Richmond, Virginia. Altria Group, Inc. (NYSE:MO) is one of the most popular tobacco stocks among hedge funds. However, the company reported a Q3 non-GAAP EPS of $1.28 and a revenue of $5.28 billion, falling short of Wall Street estimates by $0.02 and $150 million, respectively. 

According to Insider Monkey’s second quarter database, 43 hedge funds were long Altria Group, Inc. (NYSE:MO), compared to 49 funds in the prior quarter. Harris Associates is the largest stakeholder of the company, with 7.2 million shares worth $326.3 million. 

Broyhill Asset Management made the following comment about Altria Group, Inc. (NYSE:MO) in its Q4 2022 investor letter:

“We rebalanced our tobacco exposure during the year, reducing our investment in Altria Group, Inc. (NYSE:MO) as the future of the company’s combustible cigarette business became increasingly questionable given pending US legislation and a lackluster portfolio of reduced risk products. We reinvested the proceeds in Philip Morris so that relative position sizing is more consistent with our increased conviction.”

1. Philip Morris International Inc. (NYSE:PM)

Number of Hedge Fund Holders: 54

Philip Morris International Inc. (NYSE:PM) is a tobacco company that aims to transition toward a smoke-free future by expanding its product range beyond tobacco and nicotine. Their portfolio includes cigarettes, smoke-free products like IQOS and ZYN, and lighters and matches. Philip Morris International Inc. (NYSE:PM) is one of the best tobacco stocks to invest in. On October 19, the company reported a Q3 non-GAAP EPS of $1.67, beating market estimates by $0.05. The revenue increased 13.8% year-over-year to $9.14 billion. However, it fell short of Wall Street consensus by $80 million. 

According to Insider Monkey’s second quarter database, 54 hedge funds were bullish on Philip Morris International Inc. (NYSE:PM), compared to 55 funds in the prior quarter. Terry Smith’s Fundsmith LLP is the largest position holder in the company, with 15.7 million shares worth $1.5 billion.

Ariel International Fund made the following comment about Philip Morris International Inc. (NYSE:PM) in its Q1 2023 investor letter:

“Finally, tobacco maker, Philip Morris International Inc. (NYSE:PM) declined in the period on concerns related to supply-chain disruptions resulting from the war in Ukraine, which we view as temporary. We believe the favorable economics and margin expansion associated with market share gains from the IQOS brand and Reduced Risk Products should yield value creation opportunities in the years ahead. Furthermore, at current trading levels, we think the company’s operating leverage, pricing power, and free cash flow profile offer a margin of safety.”

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