Submitted by Mike Anthony as part of our contributors program.
Going into the holiday-extended weekend, many traders may be cautious about holding positions. Should Greece decide to exit the euro, markets could be shaken up on Tuesday.
Still, some sectors may offer a degree of stability. Nicotine stocks — a consumer staple — could provide a place for traders to seek shelter. Many of these stocks have been moving higher in recent weeks. Still, there may still be time to get into some of these names, as they are mostly below record levels.
1) Reynolds American (NYSE: RAI)
Looking for a traditional American tobacco manufacturer? Reynolds is the second-largest tobacco company in the US. The company owns many cigarette and snuff brands, including Camel, Doral, Grizzly and Kodiak. Shares are currently trading near $42, and are up just slightly on the session. Shares are currently near a 52-week high.
2) Star Scientific (NASDAQ: CIGX)
Star Scientific is a small, scandal-plagued company that manufacturers smokeless tobacco products. The company was founded with the goal to create nicotine alternatives that had lesser health risks than traditional tobacco products. Interestingly, It also owns a patent for a nicotine-based treatment of Alzheimer’s that has not been approved for curing any disease. Speculation about the potential value of the patent has created some volatility in the name in recent months. Still, shares are currently trading near six-month highs.
3) Philip Morris International (NYSE: PM)
Not to be confused with Philip Morris in the U.S., Philip Morris International was spun-off from Altria group back in 2008. The company focuses on the cigarette market outside of the U.S. despite still being located in New York City. Shares are currently trading near a 52-week high. Philip Morris International is obviously a more international play for traders looking for global exposure.
4) ChromaDex (OTC: CDXC)
ChromaDex is not a traditional tobacco manufacturer, but rather a lab company that tests botanical and natural products, such as the compounds found within tobacco. ChromaDex publishes a reference manual on chemicals such a nicotine, as well as other cash crops. The company is an indirect play on tobacco, but with its smaller size, could see potential upside.
5) Altria (NYSE: MO)
Altria is one of the largest tobacco companies in the world. It has numerous cigarette brands including Philip Morris and Parliament. Shares are currently trading near $32, up sharply from last August when shares were down to about $25. Altria is probably the most vanilla stock in the sector.
Tobacco stocks may not have the coolness factor of tech companies like Google (NASDAQ: GOOG) and Apple (NASDAQ: AAPL). Still, with speculation running high about the potential for a euro meltdown (and the possibility of European bank runs), tobacco stocks may just be the place investors wish to be.