Tobacco Stocks Continue to Rally

I noticed that Philip Morris, Reynolds American and Altria are all at new highs today. Here’s a look at how tobacco stocks as a whole have performed over the last 16 years.

That’s a 1,000% gain for the sector. Tobacco has done so well that the S&P 500 looks like a flat line in comparison. If anything, that chart understates tobacco’s gain because it doesn’t include dividends.

Investors need to understand that tobacco is a classic defensive sector. That means it does well when the economy doesn’t. People cut back on big ticket items when the economy is soft, but they generally don’t cut buying cigarettes.

Posted by Eddy Elfenbein on February 1st, 2016 at 10:43 am

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