In this article, we discuss 11 best tobacco and cigarette stocks to buy. If you want to skip our discussion on the tobacco industry, head directly to 5 Best Tobacco and Cigarette Stocks To Buy.
The global tobacco market is expected to reach $1049.9 billion by 2030, with a compound annual growth rate (CAGR) of 2.1% throughout the forecast period from 2023-2030. The market is witnessing growth fueled by the increasing demand of cigarettes in developing nations and the widespread adoption of next-generation products worldwide. Over a billion smokers exist globally, with more than 80% residing in middle-income countries. In 2022, the global market for e-cigarettes achieved a size of $21.8 billion. IMARC Group projects that the market will expand to $31.9 billion by 2028, reflecting a compound annual growth rate of 4.4% during the period from 2023 to 2028. The market’s growth is attributed to several key factors, including the increasing preference for e-cigarettes over traditional ones, the introduction of diverse flavors such as menthol and tobacco, and the widespread availability of products through different distribution channels.
In December 2022, flavored e-cigarettes accounted for 41.3% of e-cigarette unit sales in American retail stores, marking an increase from 29.2% in January 2020. The overall sales of e-cigarettes in the US experienced a growth of approximately 47% over this period. Deirdre Lawrence Kittner, director of the CDC’s Office on Smoking and Health, commented:
“The dramatic spikes in youth e-cigarette use back in 2017 and 2018, primarily driven by JUUL, showed us how quickly e-cigarette sales and use patterns can change. Retail sales data are key to providing real-time information on the rapidly changing e-cigarette landscape, which is essential to reducing youth tobacco use.”
In line with this trend, major tobacco companies, including British American Tobacco p.l.c. (NYSE:BTI), are now offering heat sticks created from nicotine-infused substances like rooibos tea as an alternative to comply with an upcoming European Union prohibition on flavored heated tobacco items. These “reduced risk” products, inserted into a device for heating, have been instrumental in offsetting the declining demand for conventional cigarettes attributed to increased health awareness and substantial taxation in certain markets. Similarly, Philip Morris International announced third-quarter earnings that exceeded Wall Street estimates, although the revenue fell short of consensus. The strength in sales of its heated tobacco and oral nicotine products contributed to the positive financial performance. CEO Jacek Olczak specifically pointed to the growth drivers being the IQOS line of heated tobacco products and the Zyn oral nicotine pouch.
Some of the best tobacco and cigarette stocks to buy include Philip Morris International Inc. (NYSE:PM), Altria Group, Inc. (NYSE:MO), and British American Tobacco p.l.c. (NYSE:BTI).
Our Methodology
We chose the top tobacco and cigarette stocks based on overall hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the second quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.
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Best Tobacco and Cigarette Stocks To Buy
11. Cronos Group Inc. (NASDAQ:CRON)
Number of Hedge Fund Holders: 6
Cronos Group Inc. (NASDAQ:CRON) is a cannabinoid company in the United States. It produces and sells hemp-derived supplements and cosmetic products. Additionally, Cronos Group Inc. (NASDAQ:CRON) is engaged in cultivating, manufacturing, and marketing dried cannabis, pre-rolls, edibles, concentrates, and cannabis extracts for both medical and adult-use markets. On September 18, Cronos Group Inc. (NASDAQ:CRON) announced that it has sent its initial shipment of bulk cannabis to Germany, where it will be marketed under the PEACE NATURALS brand. The company entered into a distribution agreement with Cansativa Group in July, which has a substantial pharmacy network in Germany, serving about 300,000 patients in the medical cannabis market.
According to Insider Monkey’s second quarter database, 6 hedge funds were bullish on Cronos Group Inc. (NASDAQ:CRON), compared to 8 funds in the prior quarter. Traci Lerner’s Chescapmanager LLC is the largest stakeholder of the company, with 8.3 million shares worth $16.4 million.
In addition to Philip Morris International Inc. (NYSE:PM), Altria Group, Inc. (NYSE:MO), and British American Tobacco p.l.c. (NYSE:BTI), Cronos Group Inc. (NASDAQ:CRON) is one of the best tobacco stocks to watch.
10. Aurora Cannabis Inc. (NASDAQ:ACB)
Number of Hedge Fund Holders: 7
Aurora Cannabis Inc. (NASDAQ:ACB) is involved in the production, distribution, and sale of cannabis and cannabis-related products in Canada and internationally. The company produces and sells both medical and consumer cannabis products. Additionally, Aurora Cannabis Inc. (NASDAQ:ACB) supplies propagated vegetables, ornamental plants, and hemp-derived cannabidiol products. Aurora Cannabis Inc. (NASDAQ:ACB) is one of the best tobacco and cannabis stocks to watch.
On September 28, Aurora Cannabis Inc. (NASDAQ:ACB) entered an agreement with Canaccord Genuity to sell 46.25 million common shares at C$0.73 per share, raising approximately C$33.76 million. Canaccord Genuity has the option to acquire an additional 6.93 million common shares. The net proceeds will primarily go towards paying off around US$25 million in outstanding convertible senior notes, with any remaining funds for strategic purposes and possible acquisitions.
According to Insider Monkey’s second quarter database, 7 hedge funds were bullish on Aurora Cannabis Inc. (NASDAQ:ACB), compared to 8 funds in the prior quarter. D E Shaw is a significant position holder in the company, with 1.15 million shares worth $618,264.
9. Canopy Growth Corporation (NASDAQ:CGC)
Number of Hedge Fund Holders: 8
Canopy Growth Corporation (NASDAQ:CGC) is involved in the manufacturing, distribution, and retail of cannabis and hemp-derived items for recreational and medical use. The business is divided into two segments – Global Cannabis and Other Consumer Goods. Their product range encompasses dried cannabis flower, extracts, concentrates, as well as beverages, gummies, and vaping products. On October 10, Canopy Growth Corporation (NASDAQ:CGC) obtained EU GMP certification for its Ontario-based cannabis cultivation facility, enabling the export of certified medical cannabis to Europe and global markets. Canopy Growth Corporation (NASDAQ:CGC) serves medical cannabis markets in Germany, Czech Republic, Poland, Australia, New Zealand, and the Asia-Pacific region.
According to Insider Monkey’s second quarter database, 8 hedge funds were bullish on Canopy Growth Corporation (NASDAQ:CGC), compared to 7 funds in the preceding quarter. Christian Leone’s Luxor Capital Group is the largest stakeholder of the company.
8. Tilray Brands, Inc. (NASDAQ:TLRY)
Number of Hedge Fund Holders: 15
Tilray Brands, Inc. (NASDAQ:TLRY) specializes in the research, growing, processing, and distribution of medical and adult-use cannabis products across Canada, the United States, Europe, Australia, New Zealand, and Latin America. The company’s operations are divided into four segments – Cannabis Business, Distribution Business, Beverage Alcohol Business, and Wellness Business. It is one of the best tobacco and cigarette stocks to invest in.
During 2023, Tilray Brands, Inc. (NASDAQ:TLRY) made several acquisitions, including HEXO and Truss Beverage Co., which strengthened its position in the Canadian cannabis and beverage market. In Q1 FY24, the company reported $177 million in net revenue, indicating a 15% year-over-year growth. This growth was driven by its Cannabis and Distribution divisions, which generated $70 million and $69 million in Q1 net revenue, with 20% and 14% year-over-year growth, respectively.
According to Insider Monkey’s second quarter database, 15 hedge funds were bullish on Tilray Brands, Inc. (NASDAQ:TLRY), compared to 14 funds in the prior quarter. Anand Parekh’s Alyeska Investment Group is a prominent stakeholder of the company.
7. Vector Group Ltd. (NYSE:VGR)
Number of Hedge Fund Holders: 16
Vector Group Ltd. (NYSE:VGR) manufactures and sells cigarettes in the United States under different brand names, including EAGLE 20’s and Pyramid. The company distributes its products to wholesalers, distributors, and retail chains. Vector Group Ltd. (NYSE:VGR) operates in two segments – Tobacco and Real Estate. It is one of the top tobacco stocks to buy. On November 1, Vector Group Ltd. (NYSE:VGR) reported a Q3 non-GAAP EPS of $0.33, beating market estimates by $0.01. However, the revenue of $364.11 million fell short of Street consensus by $23.39 million.
According to Insider Monkey’s second quarter database, 16 hedge funds were long Vector Group Ltd. (NYSE:VGR), same as the prior quarter. D E Shaw is the biggest stakeholder of the company, with 495,162 shares worth $6.3 million.
6. Universal Corporation (NYSE:UVV)
Number of Hedge Fund Holders: 16
Universal Corporation (NYSE:UVV) is a Virginia-based provider of leaf tobacco and plant-based ingredients. The company has two main segments – Tobacco Operations and Ingredients Operations. Universal Corporation (NYSE:UVV) engages in the sourcing, funding, processing, packaging, storage, and distribution of leaf tobacco to consumer tobacco product manufacturers. On November 2, Universal Corporation (NYSE:UVV) declared a quarterly dividend of $0.80 per share, in line with previous. The dividend is payable on February 5, 2024 to shareholders on record as of January 8.
According to Insider Monkey’s second quarter database, 16 hedge funds were bullish on Universal Corporation (NYSE:UVV), compared to 13 funds in the preceding quarter. Richard S. Pzena’s Pzena Investment Management is the largest stakeholder of the company, with 938,871 shares valued at $46.8 million.
Like Philip Morris International Inc. (NYSE:PM), Altria Group, Inc. (NYSE:MO), and British American Tobacco p.l.c. (NYSE:BTI), Universal Corporation (NYSE:UVV) is one of the best tobacco and cigarette stocks to invest in.
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Disclosure: None. 11 Best Tobacco and Cigarette Stocks To Buy is originally published on Insider Monkey.