Tobacco companies gush cash.
Cigarettes cost little to make and can be sold at a huge markup to a customer base significantly addicted to the product. Cigarette stocks trade at 5 to 6 times this year's earnings. This is the appeal of the cigarette companies. They promise steady cash flow at extraordinarily cheap prices. If you, the shareholder, do not have a clear claim to the cash, the innate profitability of the cigarette business is beside the point.