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In a recent interview with Bloomberg, Reynold (RAI) CEO Susan Cameron described how changes are leading to a potential boom period for tobacco sin stocks.

Cameron first talked about the Reynolds purchase of Lorillard (LOR), strengthening its position as the number 2 in the industry behind Altria Group (MO). This could lead to increased prices… and increase profits.

She also reported about how recent changes in the regulatory environment have made it harder for people to sue tobacco companies, allowing tobacco companies to spend less on court cases and punitive awards and more on marketing and innovation.

On the subject of innovation, there are some interesting things going on in the tobacco industry, she said, and she cited e-cigarettes as well as “heat-not-smoke” cigarettes — new products that may expand the way smokers can enjoy their smokes.

The changes in the regulatory environment have also made the US once again an competitive place for international brands like Imperial Tobacco (IMT) to participate. And new competition helps everyone in the industry because it forces all players to raise their game.

For tobacco sin stock investors, this seems to be a compelling time to pay attention to the industry: We have consolidation, a (slightly) looser regulatory environment, innovation, and competition. That’s an environment where stocks can grow.

Read the Bloomberg interview here.

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