Monster Beverage Corp (MNST), Altria Group Inc (MO): The Tobacco Industry Redux?

Lorillard Inc. (NYSE:LO)’s top brand is Newport, which is also the second-best selling cigarette brand in the U.S., which also happens to be a menthol brand — hence the reason the FDA menthol-ban scare is making Lorillard a great buying opportunity. Lorillard owns upwards of 14% of the U.S. market, third behind Altria Group Inc (NYSE:MO) and Reynolds American, Inc. (NYSE:RAI). Newport made up nearly 88% of Lorillard’s total volume as of 2012.

Bottom line

The three major U.S. tobacco companies have outperformed the S&P 500 impressively over the past decade…

And even with the likes of various lawsuits and allegations directed at the energy drink market, Monster Beverage Corp (NASDAQ:MNST) is proving to be just as resilient, with a recent pullback due to overhang, but again, I think the pressure in the stock is overdone…

Analysts put the long-term (five-year) annualized EPS growth rate for the company at 18%. And the stock trades at 25 times forward earnings, with no perfect competitors in the public markets. I like Monster for the long term, and while we’re at it, it might be worth adding Lorillard Inc. (NYSE:LO) given its 5% dividend yield and cheap valuation compared to Altria Group Inc (NYSE:MO).

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends Monster Beverage. The Motley Fool owns shares of Monster Beverage.

The article The Tobacco Industry Redux? originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.