And Here Comes Big Tobacco..

[SFC]

http://beta.fool.com...ogyholnk0000001

 

 

Why You Should Invest in Tobacco & Marijuana

 

By David Gould - March 5, 2013

 

Investing in tobacco companies is like flipping a coin. On one side, you have high regulations, taxes, and a poor PR image. On the other side, you have predictable growth and generous capital allocation policies. At any given time, the market will react largely to just one side. Do you flip? In this article, I explain my thoughts on two top tobacco producers and explain why medical marijuana will help slant the odds of the coin toss in your favor.

 

Altria is the leading cigarette company and owner of the famous Marlboro brand. In fact, Marlboro is the most popular cigarette brand in the world with a market share rank of either 1 or 2 in the regions it is operating in. On top of that, the producer has executed time and time again. In the fourth quarter, revenue came out to $6.24 billion and was ~45% better than expected.

 

Perhaps the biggest downside comes from regulatory scrutiny. There has been increasing pressure on cigarette products due to associated health effects. Cigarette companies have been threatened with regulations for more conspicuous warning labels on cigarette packets, taxes, anti-tobacco advertising, you name it. The European Union, through its Health Commission, is also implementing similar regulations. Due to government efforts to discourage the use of tobacco products, cigarette consumption has fallen in several countries. However, large companies such as Altria continue to generate good levels of cash flow. This resilience is being attributed to the diversification of its products.

 

Should Altria Market a Marijuana Brand? Yes!

 

[mrd]

They are marketing heavily in Asia

[SFC]

I know this is no surprise to any of us that have been tuned in for the last four years. It only makes perfect sense that they are truly in the best position to capitalize on MJ if it does in fact legalize.

[greenbuddha]

When Cannabis is fully legalized, as long as I can personally grow six or eight plants for my own personal use, I don't give two hoots in a dark room what big tobacco does or doesn't do.