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Wells Fargo and Thomas -- senior equity analyst at Morningstar.
I am a start with you first are they are they hitting peaks -- mean should people be playing around these stocks I -- over the long term I expect a lot more upside when I look at says the three companies that I cover my top -- is Altria Group -- -- Lorillard I think.
In terms of Altria Group it has many.
Levers to pull they've got more upside in my view from net price appreciation accelerating this year.
So I think you're gonna see some upside.
I also see the -- over the long term they've got one of there costs.
Being eliminated their federal buyout -- is is going away at the end of 2014.
So you're looking at EPS expanding if Eilat all of that -- the bottom line.
By anywhere from six to 8% acceleration for EPS -- clear Austria different then Philip Morris international.
Yes Altria I cover both but yes I'm speaking of Altria Group let's.
A little -- about Lorillard and you worry about them because of the whole.
They really rely on method.
Let's new ports basically third largest US manufacture.
But if they come down on that what happens to them.
Am a fan of Lorillard much like Bonnie if the FDA were to come down.
-- menthol cigarettes it would be quite devastating for Lorillard but I think that's highly unlikely.
So I think Lorillard and Philip Morris international are good values at these levels and also one -- and Lorillard -- is.
It currently of the major US tobacco players has the greatest -- for the 1% of total tobacco -- cigarette sales.
We talk about.
The -- cigarette company now you -- smoke forever I think.
What you're going to see in the next decade is I think consumption of and therefore I expect that the existing manufactures a large ones book actually play a big role in that and Lorillard has the first mover advantage right now with our acquisition of blue.
-- we see acceleration from EPS growth because of that and expect the sector to probably double this year in terms of sales I'm estimating over probably a billion dollars of revenue.
So when you look at -- energy category that's are obviously very small -- -- -- -- yes considerably.
And in terms of where Coke and Pepsi play a role in that or not.
This industry needs to consider that -- and play a part and that's.
Thomas do you worry about the regulatory environment I mean -- DUS is coming down.
On the tobacco companies on of course you know targeting cigarettes to kids under eighteen are you worried -- that's gonna affect sales at all.
I think sales unit sales are likely going to continue to drop about three to 4% per year for cigarette companies as they have since the 1980s.
The American tobacco companies are well versed in dealing with the regulators.
And I don't think it's going to be any immediate impact.
That said Philip Morris international which is much more geographically diverse and sells a much greater volume of cigarettes -- and the US.
Manufacture I think is probably better suited.
-- face lighter regulatory headwinds -- than the overall US.
Again it's about taking advantage of overseas right Bonnie Herzog of Wells Fargo I'm Tom -- of -- -- sir thank you both for being with us.
-- -- -- coming up 100 years -- to Camel Cigarettes debuted parent company Reynolds American is transfer.