Editor's Note: Lorillard's sales of e-cigs increased 10% sequentially and declined by 11% year-over-year in the first quarter.
E-cigarettes have been all the rage lately, with Lorillard (NYSE:LO) getting the first-mover advantage among major tobacco firms with its purchase of blu ecigs for $135 million in early 2012. Although the e-cig market is still small and fragmented, Lorillard has been able to leverage blu into a dominant market share. But more competition is on the horizon. Altria (NYSE:LO) has begun the rollout of its MarkTen e-cigarette brand, and the tobacco company also recently announced its acquisition of e-cigarette company Green Smoke for $110 million.
But there's one big myth about e-cigarettes that investors need to know about before they jump into tobacco stocks.
In this video, from Wednesday's Market Checkup, the Motley Fool's health care-focused investing show, health care analysts Michael Douglass and David Williamson take the myth of inevitable e-cigarette profitability and debunk it.
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David Williamson, Michael Douglass, and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.