Tobacco.org

Lighten Up on the Tobacco Sector ($$) 

TOBACCO STOCKS HAVE TRADED roughly in line with the market (both down 8%) -- a disappointment to us and many investors. We believe tobacco stocks have been weighed down by accelerating volume declines, a potential federal excise tax increase in 2009, state excise tax increases and a potential Democratic president.

On a total return basis, tobacco has done slightly better due to the sector's 5% average dividend yield versus 2% for the Standard & Poor's 500. Needless to say, the sector is not performing the way we had expected.

We have trimmed our 2008 earnings-per-share estimates

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