Home » tobacco sin stocks » Are E-Cigarettes A Sin Stock?

One of the reasons that smokers have a hard time trying to quit is because there are physical “costs” (withdrawal symptoms) as well as psychological an social costs as well. Smokers who are trying to quit not only crave the nicotine but also miss out on the rituals associated with smoking (unwrapping the package, extracting a cigarette, the hand-to-mouth action, as well as the social component). Gum, patches, and cold turkey just don’t deliver the same overall satisfaction.

That’s why e-cigarettes are doing so well. E-cigarettes are electronic cigarettes that deliver the hit of nicotine craved by smokers but also deliver on the rituals. E-cigarettes deliver the experience without the smoke, smell, and at a lower cost.

So it’s no wonder that e-cigarettes are a booming billion-dollar-a-year business and currently NJOY (not a publicly traded company) is in the top spot for cashing in on this booming trend.

The folks over at Fox Business interviewed NJOY CEO Craig Weiss on the brand, its success, and its potential. You can watch the video here.

So I wanted to know: Are e-cigarettes a sin stock?

By some of the strictest sin stock definitions, it is barely a sing stock: It’s not highly regulated (yet), its products aren’t dangerous (well, smokers could do without the nicotine but they’re not getting all of the harmful side effects of real tobacco), and the use of this pseudo-cigarette isn’t really taboo.

But that is changing. With an increase in awareness and use, we could see additional regulation in the near future. Although its products aren’t as dangerous as their real counterparts, e-cigarettes are not without their dangers. And there are some taboos — with the associated actions of habit, of hanging out with smokers, and even of the use of e-cigarettes (UK rail stations have recently banned them).

So e-cigarettes are not really a sin stock right now. But the elements are there. And since it the industry is still in its infancy with lots of upside potential, we may see this product gain sin stock status before long.

One way that investors may consider playing this is to watch the tobacco companies and cigarette manufacturers. They’re focused on tobacco cigarettes but they are doubtlessly paying attention to this billion dollar businsess (plus, whenever someone quits using a tranistioning method like e-cigarettes, that impacts revenue). So we may see tobacco companies build a brand extension (e-Marlboros?) or acquire a company like NJOY. Big tobacco already has everything in place (branding, infrastructure, shipping channels, and a huge market) so I believe this is a natural next step for them.

To give you a counterpoint to this argument, check out this article that says “the potential e-cigarettes have to remake the industry is a long way off”.


Nothing on this site is a recommendation because, hey, I can't read your mind and I don't know what you have in your portfolio, and I'm not a licensed financial advisor. So never EVER trade without doing your due diligence. If you want more information about this fascinating topic, please check out the Sin Stocks Disclaimer page which basically says the same thing but more emphatically.