With Altria finally breaking itself up into its domestic and international tobacco businesses, a lot of Home Gamers want to know how to play it. Do you buy the global or the domestic business? Cramer thinks the real play on the breakup isn’t either. It’s Carolina Group .
Right now, overall U.S. cigarette volumes are in decline and it is a steady long-term trend, Cramer said. It’s good for our health, but terrible for tobacco stocks. However, there’s one group within the cigarette market that’s still growing domestically: menthol cigarettes. And within menthols, there’s one brand that’s really taking share: Newport. As it happens, Newport is owned by Lorillard, which itself is a wholly owned subsidiary of the Carolina Group. Newport brand cigarettes are actually 90% of Lorillard’s sales and volume, and with Newport taking share left and right, that’s some nice leverage, Cramer said. For that reason, along with efficient production and promotion and its ownership of the highest-priced premium brand, Carolina Group is the most profitable cigarette company in the country.