The name of the American Tobacco

Wow, good thing investors in Lorillard (LO) did not listen to foreign experts and the public analyst hedge fund. Just when many analyst and hedge funds, was so quick to declare dividends to invest in U.S. stocks tobacco, but he died, the U.S. tobacco companies blowing profits and increase dividends by almost 20%. What is most interesting for me to report the income Lorillard that the release of numbers come the same way as many of them begin to turn away from the dividends of investment going into the New Year.

Like most traders and investors, I have had good and bad calls, but one of my best calls to buy Lorillard in the mid-seventies, in my first article published by Seeking Alpha. The reasons I gave for the purchase of Lorillard had a few, but the main reasons I thought it was the best U.S. tobacco companies to invest in the company’s balance sheet strength have been consistently strong organic growth. Lorillard is comparatively less regulatory and legal risks, not hurt either. While Altria (MO) and Reynolds (RAI) to get all the attention, Lorillard continues to be the most appropriate U.S. stock tobacco.

The two main advantages over their peers Lorillard more, Reynolds and Altria, superior growth and less risk of liability. Lorillard has only about 14% of the U.S. tobacco market today, compared with almost 42% market share of Altria. With Lorillard third the size of Altria and less than half the size of Reynolds, the company still has many feet, as it can grow revenues in the industry decline, continuing to take market share from big players. In addition, the fact that fewer and Lorillard had a large presence in the U.S. tobacco industry over the past few decades, and makes it less susceptible to more lawsuits, which, as a rule, the plaintiffs won a senior with a smoking-related disease.

In addition, while the taxes and regulation affect all the major tobacco companies, Lorillard markets its products at prices below its competitors, and was very successful with their cheaper brands like Maverick and Kent. The company also benefits from tobacco in 2009 legislation that combined regulation of the tobacco industry in accordance with the FDA and was the production of marketing and advertising of tobacco products is almost impossible for companies that do not yet have a large foothold in even larger cigarette market in the U.S..

In addition, while many traders and investors have always been concerned about the FDA ban menthol, legislative changes in the tobacco industry and the FDA with a positive statement of their approach to how to deal with menthol flavored cigarettes decreased significantly to these problems in the past few years. Lorillard Tobacco Company is only the U.S., which showed that he can constantly increase its profits even in a very large U.S. tobacco industry. Latest report Lorillard suggests that this trend should continue for some time.

While earnings per share, revenue and market share are important, the most important indicator to measure the strength of American companies tobacco volume. More importantly, in my opinion, than the decision to increase dividends Lorillard in the industry 20%, there was a strong number of shipments. Lorillard was not the only American tobacco companies to report a year over year increase of cigarettes shipped, but colleagues Lorillard, like Altria, in fact, reported a reduction in the annual supply of cigarettes by almost 4%.

Delivery of cigarettes a year in industry, the reduction is not easy, Lorillard, and now is an impressive achievement for three consecutive years. Lorillard wholesale shipments increased by 5.6% this year. This is one of the reasons why actually saw Lorillard 0,8% growth in market share, while Altria saw nearly 0.6% decline. Lorillard was the only U.S. tobacco companies have reported that the increase in market share.

Now let’s look at the assessment. While the stock is currently trading at about 12.5x next year’s income, tobacco stocks primarily bought for their dividends and buy back program, and Lorillard revenue growth enabled the company to continually improve the dividend is twice the industry average . Investors also seem to be comfortable buying tobacco stocks, which are able to pay at least a 5% dividend. Given that Lorillard has shown a consistent ability to grow their revenue by nearly 10% per year, and the company raised its dividend by 20% annually for several years, I think, Lorillard will be traded to about $ 140 a share. Share price of 140 would mean the shares traded at roughly 25% premium to Altria. Given that the impressive growth of Lorillard, and strong balance sheet allowed the company to continually improve its dividend by about two times faster than their peers in a few more years, 25% of the premium is more reasonable.

In conclusion, while the past is not always the best predictor of the future, Lorillard in a consistent market share and revenue growth shows the company will likely continue to outperform their larger counterparts. Lorillard Tobacco Company was the only U.S. show this year, growth in cigarettes is delivered on an annualized basis. While the largest companies in any industry, like Exxon Mobil (XOM) and Apple (AAPL), often receive the most press, the best companies are often less well known.

Even today, despite the impressive recent Lorillard in the results, the company is still the smallest of the three largest tobacco companies in the U.S. with a market capitalization of approximately USD 16000000000, Lorillard is less than one third the size of Altria, and even less in half the Reynolds. Given that Lorillard continues to innovate and bring value to shareholders at a rate much better than their larger counterparts, the market capitalization of the company, it seems likely to continue to grow in coming years.