As all eyeballs focus on the remarkable record-breaking ascent of the major indices, less attention is paid on defensive names.
That’s only natural because of immediacy bias or the tendency to perceive current emotions as more intense than previous emotions.
Nevertheless, it might be time to think about hedging against this soaring valuation and what better way to do so than with vice stocks?
One opportunity to make money in the vice sector is with tobacco-related stocks. Vapers are going wild for leading vaping products, as an estimated 6 million Americans have switched from smoking cigarettes to vaporizing e-cigarettes, according to a new study.
That’s a 66% increase over the 3 million people who regularly used e-cigarettes two years ago. In fact, one industry leader estimates that 50% of American smokers will try vaping this year alone!
The reason why Big Tobacco giants including Marlboro maker Altria (MO) and British American Tobacco (BTI) are doing so well is because they’re benefiting from the growth in sales of their high-margin vape devices or e-cigarettes through their Juul Labs subsidiary.
Juul has rapidly grown into the largest e-cigarette brand in just two years, with 57% of market share.
The company also controls nearly half of the retail market share for e-cigarettes. The Bloomberg story notes that Juul’s secret to success is “low prices, high quality and a minimal profile that allows them to operate in a gray area beyond the reach of regulators.”