timothy sykes logo

Watchlists-Penny Stock Investment Strategy

Best Canadian Tobacco Stocks: Top Targets for 2024

Written by Tim-bot
Reviewed by Friedrich Odermann Fact-checked by Ed Weinberg
Updated 12/5/2023 14 min read

Tobacco stocks in Canada refer to shares of companies involved in the production and sale of tobacco products within the Canadian market. These stocks are part of a sector that has experienced both robust dividends and significant regulatory challenges. For traders, tobacco stocks offer a unique combination of stability and volatility, as shifts in health regulations and consumer habits can impact market share and performance. Investing in tobacco stocks requires an understanding of the industry’s focus on traditional products like cigarettes and cigars, as well as emerging categories like e-cigarettes and vaping.

Readers should dive into this article because it offers a deep dive into the Canadian tobacco industry’s unique blend of stability and volatility, providing valuable insights for savvy traders.

I’ll answer the following questions:

  • What exactly are tobacco stocks?
  • How has the Canadian tobacco industry evolved?
  • What are the current trends in tobacco and cigarettes?
  • How are declining smoking rates affecting tobacco stocks?
  • What is the significance of the rise of vaping and cannabis in tobacco stocks?
  • Which are the top Canadian tobacco stocks for 2024?
  • What are the advantages and risks of investing in Canadian tobacco stocks?
  • Is it ethical to invest in tobacco stocks?

Let’s get to the picks!

What Are Tobacco Stocks?

Tobacco stocks represent shares in companies involved in the manufacturing and sale of tobacco and related products. These stocks are part of a category that’s often considered recession-proof, meaning they tend to offer steady dividend yields and profits even in economic downturns. Investors turn to tobacco stocks for their potential to provide consistent returns and profit margins, despite the ethical debates surrounding the industry. As part of the consumer staples sector, these companies, like Philip Morris International and British American Tobacco, often have a global presence and a long history of tobacco sales, including popular brands like Marlboro, Parliament, and Dunhill.

Brief Overview of the Tobacco Industry

Post image

Get my weekly watchlist, free

Sign up to jump start your trading education!

The tobacco industry encompasses companies that produce, market, and distribute tobacco and related products. Investors often eye tobacco stocks for their potential to deliver steady dividends, despite the industry’s challenges. These stocks represent a sector known for its resilience and consistent demand, though it’s also marked by regulatory headwinds and health concerns.

The Evolution of the Canadian Tobacco Industry

The Canadian tobacco industry has undergone significant changes, shaped by increasing health awareness and stringent regulations like smoking bans and tobacco taxes. The shift towards a smoke-free society has seen companies pivot to alternatives like vaping. This evolution impacts the tobacco companies’ earnings reports, as they adapt to the changing demands of consumers and the global push towards reducing tobacco smoking. Historical data and current trends suggest a move away from traditional tobacco products, influencing the strategies and management decisions of major players in the market.

Declining Smoking Rates

Smoking rates in Canada have been on a decline, influenced by health awareness and tobacco control regulations. This trend impacts tobacco companies, which must navigate the changing landscape and adapt to maintain their market share and profitability.

While Canadian tobacco stocks are navigating a complex landscape, the energy sector presents a different kind of opportunity. Top oil stocks in Canada are drawing attention as the industry recovers from historical challenges and looks towards a future with sustainable practices. These stocks are becoming increasingly attractive for traders who are keen on diversifying their portfolios and tapping into the potential of Canada’s vast natural resources. For those interested in the oil sector, here are the top oil stocks in Canada that are making waves and may be worth watching as we approach 2024.

Trends in Tobacco and Cigarettes

Despite declining smoking rates, there remain levels of consistent demand within certain tobacco categories. The industry sees periodic shifts in consumer preferences, such as the fluctuating popularity of various cigarette brands or the introduction of new products.

The Rise of Vaping and Cannabis in Tobacco Stocks

The tobacco sector is witnessing a significant shift with the rise of vaping and the integration of cannabis products. These changes represent both opportunities and risks for tobacco companies as they diversify their product ranges and navigate new regulatory environments.

The intersection of vaping and cannabis with tobacco stocks is reshaping investment strategies. Similarly, the renewable energy sector is experiencing a surge, with best renewable energy stocks in Canada emerging as top picks for forward-thinking investors. As the world shifts towards greener solutions, these stocks offer a blend of innovation and sustainability that could lead to significant growth. For traders looking to expand their horizons beyond traditional sectors, these renewable energy stocks in Canada represent a dynamic market segment with promising prospects.

Top Canadian Tobacco Stocks for 2024

My top Canadian tobacco stock picks are:

Looking ahead to 2024, top Canadian tobacco stocks are expected to navigate a complex landscape of regulatory challenges and changing consumer habits. Investors keep a close eye on the TSX listings for tobacco companies, monitoring their performance, market share, and the broader market’s response to industry shifts. Companies like Philip Morris International, with its stake in the Canadian market, are scrutinized for their ability to maintain profitability and adapt to the evolving landscape of tobacco and nicotine consumption.

Before you send in your orders, take note: I have NO plans to trade these stocks unless they fit my preferred setups. This is only a watchlist.

The best traders watch more than they trade. That’s what I’m trying to model here. Pay attention to the work that goes in, not the picks that come out.

Sign up for my NO-COST weekly watchlist to get my latest picks!

OrganiGram Holdings Inc (NASDAQ: OGI)

My first Canadian tobacco stock pick is OrganiGram Holdings Inc (NASDAQ: OGI).

OrganiGram Holdings Inc. is actually a cannabis stock. In November 2023, it caught traders’ attention with a substantial investment from British American Tobacco, signaling potential growth and development in strategic areas. The stock’s volatility on this news makes it a candidate for watchlists, as the market reacts to the evolving partnership and its implications for market performance.

Altria Group Inc. (NYSE: MO)

My second Canadian tobacco stock pick is Altria Group Inc. (NYSE: MO).

Altria’s diversification into e-cigarettes and cannabis through stakes in Juul Labs and Cronos Group has been a rollercoaster, with significant write-downs and regulatory challenges. For traders, these fluctuations in valuation and price create opportunities to trade on volatility, though the long-term investment potential remains uncertain.

British American Tobacco PLC (NYSE: BTI)

My third Canadian tobacco stock pick is British American Tobacco PLC (NYSE: BTI).

British American Tobacco, with its Canadian presence, offers a diversified portfolio in the tobacco and nicotine space. Its broad range of products across different tobacco categories makes it a stock to watch for shifts in market dynamics and consumer trends.

Japan Tobacco Inc. (OTCPK: JAPAY)

My fourth Canadian tobacco stock pick is Japan Tobacco Inc. (OTCPK: JAPAY).

Japan Tobacco’s operations in Canada through its subsidiary and its ownership in Rothmans, Benson & Hedges give it a solid footing in the Canadian market. The company’s brand strength could provide stability, but as always, regulatory factors and market demand will dictate its trading potential.

Vector Group Ltd. (NYSE: VGR)

My fifth Canadian tobacco stock pick is Vector Group Ltd. (NYSE: VGR).

Vector Group’s stake in Canadian Natural Leaf Tobacco exposes it to the Canadian market’s nuances. The company’s performance is tied to broader industry trends, making it a stock to monitor for potential trading opportunities based on market movements.

Advantages and Risks of Investing in Canadian Tobacco Stocks

Investing in Canadian tobacco stocks comes with its own set of advantages and risks. On one hand, these stocks often provide attractive dividend yields and a history of stable earnings, appealing to those seeking steady income. On the other hand, the industry faces ongoing risks from regulatory pressures, public health campaigns, and a declining number of smokers. Investors must weigh these factors, considering both the financial returns and the potential for future industry disruptions.

It’s no longer smart to look at tobacco on its own — now investors have to consider the burgeoning market of cannabis. Weed stocks in Canada have seen a rise in popularity, thanks to legalization and growing acceptance. These stocks might carry a different risk profile compared to traditional tobacco stocks, but they also offer a new avenue for potential gains. For investors curious about this evolving market and looking for top picks, these weed stocks in Canada could provide an alternative path to diversify and potentially capitalize on the green rush.

Advantages of Investing in Canadian Tobacco Stocks

Investing in Canadian tobacco stocks can offer investors a source of dividends and exposure to a historically resilient market. However, the sector’s performance is closely tied to regulatory changes and consumer health trends.

Risks of Investing in Tobacco Stocks

The risks in tobacco stock investments are significant, with potential for loss due to factors like adverse regulations, shifting consumer habits, and legal challenges. These stocks require careful monitoring to navigate the volatile landscape.

Ethical Considerations in Tobacco Investments

Ethical considerations play a significant role in the decision to invest in tobacco stocks. The industry’s link to health issues such as cancer, heart disease, and the impact of secondhand smoke prompts many to think twice. Investors are increasingly factoring in ESG (Environmental, Social, and Governance) criteria, which can influence the value and performance of tobacco companies. The ethical debate often extends to the services these companies provide and their role in promoting smoke-free alternatives.

Is it Ethical To Invest in Tobacco Stocks?

The ethics of investing in tobacco stocks is a personal consideration, weighing the potential for profit against the health impacts of tobacco products. Investors must reconcile their financial goals with the broader implications of tobacco use on public health.

Key Takeaways

The key takeaways when considering tobacco stocks include understanding the stable yet controversial nature of the industry. Investors should recognize the historical resilience of tobacco companies, the consistent dividend yields they offer, and the evolving market dynamics due to health concerns and regulatory changes. While there are similarities in the stability of these stocks across different countries, one must also acknowledge the unique aspects of the Canadian market, including its approach to tobacco control and public health.

Trading isn’t rocket science. It’s a skill you build and work on like any other. Trading has changed my life, and I think this way of life should be open to more people…

I’ve built my Trading Challenge to pass on the things I had to learn for myself. It’s the kind of community that I wish I had when I was starting out.

We don’t accept everyone. If you’re up for the challenge — I want to hear from you.

Apply to the Trading Challenge here.

Trading is a battlefield. The more knowledge you have, the better prepared you’ll be.

What Canadian tobacco stocks are on your watchlist? Let me know in the comments — I love hearing from my readers!

Frequently Asked Questions

How Have Tobacco Stocks Performed Historically?

Historically, tobacco stocks have been considered defensive investments, often providing steady dividends. However, they are not immune to market fluctuations and regulatory pressures.

What Are the Potential Future Trends in the Canadian Tobacco Industry?

Future trends may include increased regulation, the growth of vaping and cannabis sectors, and continued efforts in smoking cessation.

Are There Any Other Industries Similar to Tobacco Stocks for Investment?

Similar industries might include alcohol and fast food, where consumer habits and regulatory scrutiny play significant roles in the companies’ performance.

What Are the Top Canadian Tobacco Stocks To Invest In?

When looking at Canadian tobacco stocks, investors often consider companies like IMBBy and well-known brands such as Lucky Strike. These companies can be part of the ETFs focusing on tobacco and consumer goods sectors. For those investing directly in stocks, financial results and market positions are crucial pieces of information to review before making investment decisions.

How Do Acquisitions Impact Tobacco Company Stocks?

Acquisitions in the tobacco industry, such as a major tobacco company buying out a competitor, can significantly impact stock value. These business moves can result in increased market share and a stronger business model, leading to potential growth in investor money and market performance.

Where Can I Find Information on Tobacco Stocks?

For current and historical data on tobacco stocks, investors can refer to financial sites and pages dedicated to stock market information. These often provide detailed charts and analysis to aid in decision-making. Additionally, company acquisition news can be critical, as it can dramatically affect a tobacco company’s stock price and market positioning.

Is There a Market Trend of Quitting Tobacco Stocks?

The trend of quitting tobacco use can influence the stock market, as it impacts the business outlook for tobacco companies. This social situation is sometimes reflected in market sentiment and may affect ETFs that hold tobacco stocks. Investors should keep an eye on industry charts and visit financial sites for updates on such trends.

How Do Beverage Acquisitions Affect Tobacco Stocks?

When a tobacco company expands into the beverage industry through acquisition, it can diversify its business and reduce the risk associated with the tobacco market alone. However, investors should consider the health implications, such as lung concerns, which can influence public opinion and the company’s results. Watching market analyses on YouTube and other platforms can provide a broader perspective on such situations.

Are There Plenty of Canadian Tobacco Stocks To Choose From in Canadian Markets?

While Canadian markets may not have a vast array of tobacco companies compared to some other sectors, there are still a notable few that stand out. Investors looking for exposure to this industry have a selection, though not plenty, which includes some of the most well-known names in tobacco. These companies are typically featured in market analyses and can be included in various ETFs that cover sin stocks or specific market niches related to tobacco.

How much has this post helped you?

Leave a reply

Author card Timothy Sykes picture

Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”