Altria Group Inc (MO), Reynolds American, Inc. (RAI): How to Profit Off of a New Trend

What makes Lorillard Inc. (NYSE:LO) very appealing is that, unlike the aforementioned companies, its revenue and earnings have consistently improved annually. Lorillard currently yields 5.10%, and share buybacks are commonplace.

The big concern here is that the FDA is expected to come down hard on menthol-flavored cigarettes; this would hurt Newport Menthol sales. At the same time, Lorillard Inc. (NYSE:LO) is growing faster in the e-cigarette market than its peers.

Conclusion

All three companies sell an addictive product, and all three have prepared for changing industry trends. Altria Group Inc (NYSE:MO) is likely to be the most resilient investment thanks to its sheer size and broad diversification. Reynolds American, Inc. (NYSE:RAI) has been aggressive with its innovation, giving it the potential to reward shareholders in the near future. Lorillard Inc. (NYSE:LO) is ahead of the pack in the rapidly-growing e-cigarette market, giving it the most upside potential. Lorillard is also likely to be the least resilient to broad market corrections, however. The correct investment, of course, depends on your investing strategy and time frame.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article How to Profit Off of a New Trend originally appeared on Fool.com.

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