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Giant tobacco maker Reynolds American Inc.’s (RAI - Analyst Report) subsidiary, R.J. Reynolds Vapor Company, is expanding its distribution network of e-cigarette and has announced that its tailor-made e-cigarette, Vuse, will be available throughout retail outlets in Colorado from Jul 2013.

The company has put a lot of focus on the e-cigarette category which is gradually becoming very popular especially among youngsters. E-cigarettes give the simulating effect of cigarettes and thus, help people who want to quit smoking.

The company has formed a new subsidiary, R.J. Reynolds Vapor Company, where it has re-engineered and developed its own patented vapor technology and is currently testing the new product, Vuse. Vuse has been designed by R.J. Reynolds’ R&D experts with the help of innovative digital technology and has been designed and assembled in the U.S.

Vuse will be available in two varieties — Vuse Solo and Vuse System. The Vuse Solo package will include a flavor cartridge, a rechargeable Vuse Power Unit and a USB charger. It will be priced at around $10.00.

The Vuse System will include three flavor cartridges, a rechargeable Vuse Power Unit, a USB charger and an AC wall adapter. All these will come in a carrying case. Vuse System will be priced at $6.00.

On Apr 23, Reynolds delivered a robust first-quarter earnings of 72 cents per share, surpassing the year-ago earnings by 14.3%. Earnings improved on the back of cost reduction efforts, positive pricing and expense management and were ahead of the Zacks Consensus Estimate by 4.3%.

Although the Tobacco segment suffered volume declines due to the ongoing anti-tobacco campaigns and rising excise tax imposed by governments around the globe, the American Snuff segment reported modest gains on the back of rising market share of the Grizzly brand.

Other Stocks to Consider

Reynolds American holds a Zacks Rank #3 (Hold). Another cigarette company, Lorillard  Inc (LO - Analyst Report), carries a Zacks Rank #2 (Buy). Others stocks in the consumer staples sector that are portraying a strong upward trend in the bourses are Flower Foods Inc (FLO - Snapshot Report) and Green Mountain Coffee Roasters Inc. (GMCR - Analyst Report), carry a Zacks Rank #1 (Strong Buy)

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