A Smoke-Free Trade

Published on
October 9th, 2019
Duration
21 minutes

A Smoke-Free Trade

Trade Ideas ·
Featuring Peter Boockvar

Published on: October 9th, 2019 • Duration: 21 minutes

Peter Boockvar of The Boock Report discusses the opportunity he sees in tobacco stocks Philip Morris & Altria. In this interview with Justine Underhill, Peter walks through the recent issues with vaping, highlights the coming transition to a smoke-free world, and breaks down the upside he sees for the two stocks. Filmed on October 8, 2019.

Comments

Transcript

  • MY
    Michael Y.
    14 October 2019 @ 21:07
    Can't help myself because this still feels like a hot button issue. Talking about nicotine delivery products as being assets strikes me as the kind of asset to an org that is still ultimately a liability to public and personal health. There's no good benefit to ingesting nicotine and, as the BigPharma industry has shown, getting an FDA stamp doesn't make something good for you. While these companies will still make a buck, and there's going to be some arbitrage opportunity here, I can't help but root for these tobacco orgs to finally hit the end of their road. How can inhaling anything be turned into a good long term (50+ year) business? Also, as far regulating youth access, if kids can't get it in the store then we're likely to continue seeing the proliferation of the black market and the even more harmful products being made in someone's garage.
  • JK
    Jay K.
    9 October 2019 @ 16:45
    Juul is the best thing since sliced bread. Please don't ban it.
  • MK
    MILTOS K.
    9 October 2019 @ 16:11
    Hello. Some of the data in the video are not correct. IQOS had a serious marketing campaign in Greece (which is one of their biggest iqos sticks factory located) but they have very low success compared to the marketing budget spend. So the conversion rate from analog cigs is too low as the product itself (the sticks) have nothing to be close in taste comparing to e-cigs or analogs. There is also a major risk here concerning lobying as the other big tobacco enter the market but with e-cigs and not those heating devices. What i would search more in that trade is the profit margin per IQOS stick in comparison to profit margin per analog cigs. From my research the profit margins are multipliers of the analog/classic e-cigs.
    • MK
      MILTOS K.
      9 October 2019 @ 16:13
      Also another very important risk is Health claims. In EU health claims are not lifted against IQOS and this is the reason why Altria still is the vehicle for Altria , so if things go south altria takes the hit
  • PG
    Philippe G.
    9 October 2019 @ 16:03
    Interesting thesis on these "sensitive" businesses, both stocks/companies are big ships to steer away from traditional tobacco.
    • ML
      Murali L.
      12 October 2019 @ 17:17
      Thanks Philippe. Are you saying “both stocks/companies are big ships to steer away from tobacco” or stay away from these stocks? Just checking
    • PG
      Philippe G.
      15 October 2019 @ 22:43
      Murali - meant that it'll be a big undertaking for these 2 behemoths to change their business models. As for the stocks as an investment opportunity, not sure, but I'll keep an eye on them as the make the transition...never done a deep-dive to have a more concrete opinion. Of course, I'm familiar with the names...
  • tc
    t c.
    9 October 2019 @ 15:48
    Dissapointed with Boockvar. Can anyone trust these companies to be honest about their products? Health issues aside, he hasn't been picking very well over recent times.
  • TS
    Taranvir S.
    9 October 2019 @ 12:39
    The "sin" stocks will stay unliked as the ESG theme grows and divestments continue by some of the largest sovereign wealth/institutional investors. Plus, there's so many negative headlines around this that it's hard to see these go up in the near-term
    • TR
      Travis R.
      9 October 2019 @ 14:40
      More reasons arguing for initiation of long term investment.
    • CM
      Chris M.
      9 October 2019 @ 19:30
      I agree with Travis. If you don't have an issue investing in tobacco, then this is probably the best time to do it. Also, cash flow is recession resistant as people don't drop smoking in a downturn, though they may cycle to lower cost products. See very little downside risk at these prices. Thought it was a good analysis.