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Tobacco Stocks Reverse After Trump Threatens Flavored E-Cigarette Ban

Tobacco Stocks Reverse After Trump Threatens Flavored E-Cigarette Ban
Check out this article by BILL PETERS and Investors Business Daily


Tobacco stocks like Altria (MO) and Philip Morris International (PM) erased losses to finish Wednesday higher after the Trump administration said it’s preparing to ban many flavored e-cigarettes, after a string of vaping-related deaths and lung illnesses whose exact cause has eluded health officials.

“The Trump administration is making it clear that we intend to clear the market of flavored e-cigarettes to reverse the deeply concerning epidemic of youth e-cigarette use that is impacting children, families, schools and communities,” Health and Human Services Secretary Alex Azar said in a statement.

Also in that statement, the Department of Health & Human Services said that the FDA intended to finalize a policy “in the coming weeks” that would “prioritize the agency’s enforcement of the premarket authorization requirements for non-tobacco-flavored e-cigarettes, including mint and menthol, clearing the market of unauthorized, non-tobacco-flavored e-cigarette products.”

CDC: ‘Consider Not Using’

E-cigarettes’ rising popularity has attracted more attention from big tobacco companies looking to boost sales as demand weakens for traditional cigarettes. But as younger people turn to those devices, pressure has grown in some states to crack down.

At least six people have died and more than 450 people have experienced lung problems in recent weeks that the Centers for Disease Control and Prevention believes could be related to the recent use of vaping devices. The illnesses span more than 30 states.

“No evidence of infectious diseases has been identified; therefore lung illnesses are likely associated with a chemical exposure,” the CDC said in a Sept. 6 investigation notice.

The agency has recommended people “consider not using e-cigarette products” while it investigates the incidents. It also advised not buying e-cigarettes, including those containing THC or other compounds from cannabis, off the street.

Investigators have also focused on what role some compounds in vaping juices might play in the incidents. The New York State Department of Health said that vitamin E acetate, a compound found in some illicit-market cannabis vaping devices, was a “key focus” of investigations of severe vaping-linked lung illnesses there.

Tobacco Stocks Reverse Higher

Altria stock closed up 1.1% in the stock market today after falling as much as 1.3% earlier. The Marlboro maker in December said it had invested $12.8 billion in Juul, representing a 35% stake in the vaping startup, which dominates much of the e-cigarette market. Altria stock has a weak 35 Composite Rating. Its EPS Rating, a gauge of its ability to accelerate profits, stood at 76.

Philip Morris International climbed 2% after dipping 0.5% earlier. That stock has a 19 Composite Rating and a 68 EPS Rating.

British American Tobacco (BTI) rose 2.4%. The tobacco industry group currently ranks at 193, near the bottom of the 197 industry groups IBD tracks.

But Turning Point Brands (TPB), which owns rolling-paper maker Zig Zag and oversees a few vaping companies, sank 6.5%.

FDA Warns Juul

JuulThe FDA on Monday sent a warning notice to Juul, accusing it of ignoring the law in “marketing unauthorized modified risk tobacco products, including in outreach to youth.”

The agency, in a statement announcing the warning, also alleged that a Juul representative, speaking with school students at a presentation, described Juul as “much safer than cigarettes” and said that “FDA would approve it any day.” The FDA requested the vaping company respond within 15 days outlining corrective measures.

Altria also has a stake in Canadian pot producer Cronos Group (CRON). Cronos has said it plans to focus on selling vaping products when sales of those and other cannabis derivatives become legal in Canada later this year.

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