The Biggest E-Cigarette Investing Myth

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.DL  ) 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.DL  ) 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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  • Report this Comment On May 17, 2014, at 12:19 PM, klabing wrote:

    The FDA is not going to make it any more difficult for ecig as it does for other tobaccos.

    there is your downside.

    buy the small ones .GLLA.......VPCO

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Michael Douglass

As the Motley Fool's Health Care Editor/Analyst, I focus on all things health care -- although my greatest interest is in the megatrends reshaping the American health care system, including the Affordable Care Act, Accountable Care Organizations, a shifting regulatory landscape, and the new drug discoveries fundamentally changing disease management and treatment.

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