U.S. tobacco market is the way to go for investors who want to keep their money safe, says Nik Modi, a tobacco analyst at UBS.
The U.S. tobacco market had a tough first half of the year due to “technical noise,” but Modi reassured investors that this is a buying opportunity. Modi says it is expected to improve in the second half.
Investing in tobacco companies is seen traditionally as a defensive play when the economy is in bear market territory. U.S. tobacco companies' sales internationally are doing exceptionally well -- while sales in the U.S. are declining, due to oversupply and concerns over inflation as well as demand.
Modi "highly" recommends buying Lorrillard, the company whose main product is Newport, "the best brand of tobacco in the United States."
Modi does not own any Lorrillard stock. UBS has received compensation from Lorrillard.