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Shares of tobacco maker Reynolds AmericanInc. (RAI - Analyst Report) hit a new 52-week high of $62.25 on Jun 19, 2014, recording a healthy year-to-date return of 26.2%.

RAI shares gained momentum after it announced on Jun 18 that it will launch its successful e-cigarette brand Vuse nationwide, beginning Jun 23. (Read: Reynolds' Vuse Expanding Nationwide from Jun 23)

Growth Drivers

Vuse received favorable response since its launch in 500 stores in Colorado in July last year and also gained major market share in Utah where it was launched earlier this year. Reynolds launched the brand in two varieties — Vuse Solo and Vuse System.

Vuse is a “digital” cigarette as it is fitted with a proprietary computer chip modulating its performance. The chip delivers consistent flavor giving it an edge over other e-cigarettes.

The Vuse Solo includes a flavor cartridge, which comes in two flavors — original and menthol — a rechargeable Vuse power unit and a USB charger. Moreover, the depleted cartridges and power units can be returned to Reynolds Vapor Company through a prepaid mailer available at the online shopping site of the brand.

In order to facilitate smooth distribution, Reynolds’ two subsidiaries — R.J. Reynolds Tobacco Company and R.J. Reynolds Vapor Company — entered into a service agreement last month to gear up the production of e-cigarettes within the next four years.

To support the increased supply, Reynolds, which currently carries a Zacks Rank #3 (Hold) has announced the expansion of its manufacturing facility in Tobaccoville, NC. In addition, the cigarette maker is planning to install high speed, next generation e-cigarette manufacturing equipment at the facility. (Read: Reynolds Boosts e-Cigarette Investment).

Two tobacco stocks that also reached a 52 week high on the same day as Reynolds were Altria Group Inc. (MO - Analyst Report) and Lorillard Inc. (LO - Analyst Report). Both Altria and Lorillard are also putting great focus on the e-cigarette category. Moreover, n an attempt to boost its unconventional cigarettes, Altria entered into a strategic agreement with Philip Morris International Inc. (PM - Analyst Report). Under the agreement, Philip Morris will market Altria’s MarkTen e-cigarettes internationally and the latter will distribute two of Philip Morris’ heated tobacco products in the U.S.

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