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Profiting from Tobacco Stocks

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.

Recommendations:

Modi "highly" recommends buying Lorrillard, the company whose main product is Newport, "the best brand of tobacco in the United States."

Disclosures:

Modi does not own any Lorrillard stock. UBS has received compensation from Lorrillard.

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