Tobacco Giant Scores Big – What’s Next?

Dear reader,

Stocks locked in another solid week off the back of earnings season…

The major indexes continue to show strength, with the tech-heavy Nasdaq leading the way higher. It has rallied four out of five days and hit its best level ever on Friday.

We’ve seen a few winners so far during earnings season. And I want to highlight one of them today…

It’s not often a $200 billion company flies under the radar. But that has been the case with Philip Morris International (PM). The global leader in tobacco products hit a homerun with its $16 billion purchase of Swedish Match in 2022. The crown jewel of the acquisition was the Zyn brand – the market leader in nicotine pouches with a 74% market share.

Philip Morris’ stock has gained 40% this year so far – hitting a new all-time high along the way. In the company’s latest earnings release, it was evident this strength was driven by growth in its smoke-free tobacco division, which includes the Zyn brand.

The smoke-free division now accounts for nearly 40% of all revenue thanks to the robust growth of the Zyn brand. Philip Morris shipped 41% more cans of Zyn during the latest quarter over last year. And it plans to sell up to 580 million cans of Zyn in 2024.

If you’re not familiar with Zyn, it’s a little white nicotine pouch that doesn’t contain any tobacco. It has taken off among the younger generation as the use of nicotine – while very addictive – is being discussed by some “health experts” on social media.

If you watch me on the SteadyTrade Podcast, you know that I use Zyn from time to time and do see some benefits from the low use of nicotine.

To be clear, I’m not recommending that folks should use Zyn. Again, it’s highly addictive. But from an investment standpoint, I can tell you it’s one of the hottest trends in the U.S. and abroad right now.

Philip Morris caught lightening in a bottle when it purchased Swedish Match two years ago. And I expect the stock will continue to ride this trend for the foreseeable future.

Plus, the 4.1% dividend it offers is a nice bonus.

In the long term, the overall performance of Philip Morris will likely depend on whether Zyn is simply a fad or a sustainable trend. There are a lot of factors that could push it in either direction – only time will tell.

Now, let’s recap everything we talked about in Market Insights this week…

Monday: Equity analysts at Goldman Sachs woke up on the wrong side of the bed to start the week. Monday morning, the global investment bank released a new report forecasting only a 3% annualized return for the S&P 500 in the next decade. But this doom-and-gloom isn’t worth worrying about just yet. Click here to read Don’t Buy Into Wall Street’s Doom-and-Gloom Market Outlook. 

Tuesday: It’s widely known that stocks have been consistently hitting record levels this year. Even the gold bugs have been celebrating – as the precious metal recently reached its highest level ever. But now, another asset is quietly hitting its best level in more than a decade. Click here to read Get Ready to Ride the Silver Bull.

Wednesday: Recent action in the world’s largest cryptocurrency has captured the attention of both big institutions and the average investor. On this new episode of the SteadyTrade Podcast, Tim Bohen and I discuss the latest bitcoin (BTC-USD) action and what it means for the entire crypto market heading into both the election and 2025. Click here to read Bitcoin Could Reach $100K Sooner Than Expected. 

Thursday: It’s helpful to have a game plan when it comes to the stock market. But Imre Gams and I agree that one strategy in particular is especially useful. Imre takes over Market Insights to detail what to know about this powerful strategy and shares how it can both protect your portfolio as well as boost it higher. Click here to read The True Power of Technical Analysis.

Friday: Tesla (TSLA) reported blockbuster numbers that sent bearish investors scrambling back into hibernation. A few factors drove the strength. But what’s becoming even clearer is that the electric vehicle (EV) trend is here to stay. And that means opportunities are ahead. Click here to read Tesla’s Earnings Mark a Pivotal Moment for EVs.

Here’s to the future,

Matt McCall
Editor, Market Insights

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