Not everyone is interested in the stock market, and with good reason. It can be volatile to say the least. For some, it’s simply a form of gambling. For others, it’s a chance to grow their nest egg a lot faster than “safer” and more “stable” investments. Sometimes that stability we look for isn’t even real. Take the housing market not too many years back. I don’t have to tell you how many people were so sure the market was doing well, only to find out it was completely rotten on the inside. Just watch the Oscar winning film The Big Short. It’ll appall you.
But we aren’t here to tell you if investing in the stock market is a good thing. That is way beyond us and we aren’t anywhere close to financial experts. We’re observers, at most. What we find the most interesting, however, are electronic cigarettes. Of course we do! We work at ECCR for gosh sakes. We live, eat, and breathe electronic cigarettes. We do it out of love too, so there is no complaining here. We love to see people get excited about the endless possibilities that ecigs bring. We can’t help but gush over our favorite brands, because we’re just that pumped.
That being said, it struck me that we haven’t really looked at the stocks that are behind some of these big companies. When the ecig revolution first got going, all we had were small companies. It was a great way to start the vapor movement, but these brands weren’t public. You couldn’t go out and buy some stock in an ecig company because they were all privately owned. As you probably know, that has changed over the last couple years as Big Tobacco has bought into the ecig business in a big way. Now, we can actually think about ecig stocks.
Ecig Stocks Pros and Cons
To start out, we have to be sure to point out that there aren’t really any “ecig stocks” per se. The biggest brands are all owned by even bigger conglomerates. That means these are companies where electronic cigarettes may be only a small part of their business, but hey, at least stocks are available now. We’re “bullish” as they say, on electronic cigarettes. That means we are optimistic and see a lot of growth potential. For now, this potential may not influence these big companies.
Take Altria, for instance. Altria is an enormous company that owns Phillip Morris, maker of Marlboro traditional tobacco cigarettes. This is a mammoth company, one of the biggest in the world. Their ecig business, which consists of MarkTen and Green Smoke, is tiny in comparison to their overall business. Still, if we look 20 years in the future, vapor could be a majority of their business. Actually, that may be too far out! It could be a decade; it could even be 5 years. The ecig market is heating up again, and the impact of vaping is now being understood.
If you wanted to buy some stock in Altria, you better have some money. Each share is currently worth about $115. Despite the rates of smoking falling, Altria has found a way to make even more money out of fewer customers. That’s mainly because smokers are at the whim of Big Tobacco and their price hikes. So even though Altria had a couple of down quarters, they were able to bounce back this past quarter and show potential for even more.
RJ Reynolds, who owns Vuse, is also on a nice run themselves. The tobacco giant may have not made much progress this year for their stock price, but they have seen some huge gains in the past 5 years, just like Altria. Not to be left out, Imperial Tobacco, who now owns Blu Ecigs, is also up in the past 5 years, nearly doubling their price. They’ve made these gains before they took over Blu, and they are also traded in London, not New York, so you have to keep that in mind.
Overall, we have seen all the major ecig stocks up big. The question is how will this trend play out once tobacco sales become a smaller part of their business. Will electronic cigarettes make up for this and cause their stocks to rise further, or will they finally come crashing down? We do have to say that these are companies who have faced significant challenges and still been able to grow their businesses. That kind of consistency makes us think they could reap the rewards of the ecig revolution. Yet, there is always the flip side to be concerned about. What do you think? Are ecig stocks the place to put your money? Tweet at us at @eccrtweet and let us know what you think will happen.