Pantagraph, for example, believe that companies generating most of their business in the United States offer “wide competitive moats”. Number one in their suggested list is Reynolds American. “Investing in cigarette makers might seem foolish, since U.S. smoking rates have been falling over the past five decades. However, Reynolds offsets those declines by raising prices, cutting costs, and buying back stock.” Also, it is suggested, they have much to gain from the burgeoning vape market and their Vuse brand.
The Motely Fool, another investment website, doesn’t hold the same opinion: “Despite the hoopla surrounding e-cigs, there are limited opportunities available to invest in this segment of the industry.” They contend: “Just as traditional cigarettes have drawn fire from the concerned non-smoking public, e-cigs are inevitably headed toward the same fate.” The writer concludes: “With few viable ‘pure-play’ options available, I think the answer is no. Tobacco companies will certainly take advantage of the growing industry, but it will be to replace lost business and stagnating sales from declines in cigarette use.”
The Fool compares the vape market to the tobacco sector unfavourably. Although there are millions of users in the States, the total sales figure of $800million comes across as small beans when lined up next to the $22.7billion still being achieved from cigarette sales.
Insider Financial point out that money managers considering going into vape stocks ought to consider it an investment for the long haul. It reminds its readers that the worldwide market is predicted to blossom to $32.11 billion by 2021. A rosy future, maybe, but one set against a backdrop: “one of the problems with e-cigarettes is that there’s a debate over their benefits since the effects of vaping on the human body are not yet fully known.” Not just that, but market expectations can be particularly harsh is they are not met: “The bottom fell out from under Electronic Cigarettes International Group Ltd in May after disappointing earnings. Shares then made fresh 52 week lows in early June and have been attempting a comeback ever since.”
Another contrasting opinion is offered up by the Global E-cigarette Market 2016-2020 report: “The analysts forecast global e-cigarette market to grow at a CAGR of 24.33% during the period 2016-2020. According to the e-cigarette market report, a key growth driver is the fact that e-cigarettes are considered to be a safer alternative to tobacco smoking.”
Rather than providing a safe harbour for funds, it seems as though expert opinion on ecig stocks is a varied as those given by public health experts on the product itself.