Technical Analysis: Cigarette Stocks Still a Healthy Portfolio Choice

    Technical Analysis: Cigarette Stocks Still a Healthy Portfolio Choice

  PR Newswire

  LONDON, January 16, 2013

LONDON, January 16, 2013 /PRNewswire/ --

Companies mentioned in this release have been covered by our technical
research team. These technical analyses are available for free at

http://www.stockcall.com/register

While much has been made over government efforts to dissuade the use of
tobacco, several companies in the cigarettes industry have still managed to
perform well over the last little while. The industry is currently dealing
with a number of newly proposed and/or implemented regulatory changes around
the globe, but looks well positioned to continue to grow.   

Packaging is one area where governments have been imposing their will of late.
Australia now has regulations in place that require all cigarettes to be sold
in the same packaging, except for the name and type of cigarette, and also
requires that 75% of the front side of packaging be covered with graphic
images. How this well affect cigarette sales remains to be seen, but other
nations are certainly watching closely. The European Union's Health Commission
has declared revisions to its Tobacco Products Directive, which if approved
would usher in similar packaging laws. In response, Philip Morris
International Inc. 's ^(1) (NYSE: PM) Vice President, Communications, Julie
Soderlund, stated via press release ^(2) in mid-December 2012:

"PMI is pleased that the Commission has finally issued its proposed Tobacco
Products Directive so that it now may be reviewed and debated in an open,
transparent, objective and constructive manner by all concerned in the coming
months." She said further down the release: "We trust that the hostility of
some towards our industry will not blind them to the important economic, legal
and societal issues that this proposed Directive raises. We believe that its
numerous flaws need to be addressed to ensure that the EU implements a
regulatory framework for tobacco products in Europe that is fair,
science-based and effective in reducing the harm caused by smoking without
imposing unnecessary burden on the economy. Europe deserves nothing less." 

Although smoking has declined in a number of countries, companies, like Altria
Group Inc. (NYSE: MO), have still managed to turn in solid numbers due to
innovative products and the ability to raise prices without significant
backlash, among other things. For its most recent quarter, Altria saw revenue
growth of 2.2%, and when adjusted to include one-time items, earnings were up
3.2%. Whilst higher cigarette prices on all its cigarette brands helped boost
profit, debt-repurchase charge impacted the overall outcome by 44%. Our
technical analysis on Altria is available at

http://www.StockCall.com/MO011613.pdf 

The top players in the cigarette industry, Altria Group, Lorillard Inc. ^(3)
(NYSE: LO) and Reynolds American ^(4) (NYSE: RAI) have been seeing success
with smokeless tobacco products. With traditional cigarette volumes on a
decline, companies are adapting and trying to stay profitable. In 2012,
Lorillard bought Blu e-cigs for $135 million. This acquisition brought in $14
million in revenue for Lorillard in its third quarter earnings report. The
value of being proactive in the smokeless products segment has become key for
Reynolds American has it tackles with dwindling cigarettes sales.   

The industry has also been receiving increased investor attention of late, as
many industry players offer high dividends and this is a major long-term
argument for investors.

Footer:

1.Philip Morris International Technical Analysis [
    http://www.StockCall.com/PM011613.pdf ] 
2.Source - Philip Morris International Comments on the European Commission's
    Proposed Revision of the Tobacco Products Directive (pmi.com - Media
    Center)
3.Lorillard Inc. Technical Analysis [ http://www.StockCall.com/LO011613.pdf
    ] 
4.Reynolds American Technical Analysis [
    http://www.StockCall.com/RAI011613.pdf ] 

About StockCall.com

StockCall.com is a financial website where investors can have easy, precise
and comprehensive research and opinions on stocks making the headlines. Sign
up today to talk to our financial analyst at

http://www.stockcall.com 

Contact: Contact Person:William T. Knight, Email: info@stockcall.com, Contact
Number: +1(646)396-9857 (9:00 am EST - 01:30 pm EST).
 
Press spacebar to pause and continue. Press esc to stop.