Lorillard, Inc. (NYSE:LO)

China, Russia, Brazil and the rest of the 'smoking nations' will continue making Lorillard profitable to the max. It will easily outrun the S&P 500.

Good cigarette company compared to other cigarette companies. Not drowning in debt.

Vice is nice

Buying on the dip. LO is still rebounding from FDA smear attack on menthol as worse than Blue Asbestos, or Mercury, or Cesium 137; everyone knows cigarettes are harmful, but the FDA's effort to kill off tobacco companies one at a time seems to have only embarrassed them.

DIVID

9/6/2011 BNY port add 8/22/2011 buy today 107.09

Scruffy believes in this company.

Cash rich, stable dividend, smallest player so largest potential for growth.

Cigarettes cost 1c to make, and sell for about 50c with minimal overhead cost. Combined with its addictiveness, that makes for a nice business model. Keep sending me cash (7% at the price I got in), much better then a savings account. Not worried about litigation, getting rid of cigarettes is almost as impossible as getting rid of oil, gambling, or prostitution If only they could push Newport internationally...

Lorillard's flagship brand is Newport Menthol. Menthol cigarettes are receiving negative publicity and the FDA may seek to totally ban over the next couple of years. Either this ban will be successful a terrible situation for LO, or the ban will be defeated through expensive lobbying, a somewhat pyrrhic victory for LO.

Combine that with the new smoking warning packs going into effect next year, and an already fairly price earnings multiple, and I don't see much reason to be a part of this one over the next several years.

As more countries industrialize, more people will have money for minor luxuries.

cash fountain, low PE

The room for cigarettes is getting smaller and smaller because of laws and public awareness of the harm for health

Small P/E. Big dividend. Big yield 6.88%

dividend!!!

acually a but down

First the regulatory BS going on:

Not a lot of scientific evidence that menthol leads to increased levels of addiction and cancer

I give gov't the benefit of the doubt (almost laugh as I type that) that they have read history and understand what happened following Prohibition

FDA just adds additional regulation or warning labels, a total ban will not take place

The investment case for LO:

LO will continue to add some diversification to the portfoliol; expect sales to grow in the low single digits and mkt share in menthols will continue to hold

Will continue to increase dividends and buy back stock (they have already leveraged their finances to capitalize purchases - smart move)

Added some prominent mgt - former Altria guys; needed a good CFO so they would stop falling short on Wall St estimates

Eventually, LO will sort of "run out of options" so to speak in terms of what it can do to grow share price and will sell; it is only a small player among giants but has an incredibly valuable brand that others would love to add to their portfolios - premium brand menthols, very high profits margins, minority consumers, etc.

LO will go out at similar valuations of other tobacco companies - approximately 15x earnings (at times even higher a la UST) - so if LO is able to earn at least $7-8 (should easily happen) over the next 3 yrs we reach a target of $105-120

How do you like dem' apples?

Personally, with cheap financing available & the cost cutting another big could implement, I think another company would move on the purchase within the next few years but LO will do well regardless

When Uncle Sam makes up his mind that something is "bad" watchout!

People will sacrifice many things to get their pack of smokes, especially those that chain smoke Newports (menthol). Economy worsens? people smoke. Economy gets better? people smoke. Do I feel bad making money off people that are slowly killing themselves? Nope, it's their choice. Lolz.