clint

Invest in the tobacco industry

The investment superstars Peter Lynch and Warren E. Buffett differ on tobacco stocks like Philip Morris. Mr. Buffett told Berkshire Hathaway shareholders yesterday that he doubted that tobacco companies had a bright future. Mr. Lynch, former manager of Fidelity Magellan, says they are undervalued. – Wall Street Journal 1994.

Why I like to invest in the tobacco industry? Pricing power (they can rise prices and the customers still will buy their products), low valuation(and high dividends), very low competition(who starts a tobacco company in 2021??).

Stats

Stickiness, pricing power and low valuation has given great returns over a long time.

Notice that many countries still increase their tobacco consumtion. One of the reasons is the raise from poor to middleclass.

I believe in the future of nicotine products. Nicotine consumtion world wide is trending upwards. I think less harmfull products like Swedish Match’ ZYN or British American Tobacco’s VELO will become more and more popular in the years to come.



My portfolio (juli 2021)

I still working on the portfolio and may be adding some more companies over time if I find the valuation and prospects attractive.

Great video with Terry Smith on the tobacco industry.

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