David Burrows ReynoldsAmerican Inc. RAI-N BUY Jul 12, 2006

Acquired Lorrilard tobacco, which was big in vapour sticks. Thinks there is money to be made here.

Has a great yield and a great secular trajectory on growth. This falls broadly into the “sin stock” basket with tobacco. He worries that the pricing ultimately gets to a point where it becomes prohibitive. It hasn’t found that point yet and the price mix is just fine. A long-term secular grower. A good one to play with a reasonable valuation.

Tobacco, but tobacco that is virtually all 100% US centric. Has no emerging market exposure, currency risk, and has acquired Lorillard. There is another tailwind that is positive for them, which is gas prices. 50% of all cigarette purchases occur at the gas station. Dividend yield of 3.33%.

He likes the name. He is revisiting it. It has a fairly low beta. 3.3% dividend. Higher highs and higher lows. It is not cheap, but you are getting that low beta profile.

(A Top Pick March 29/16. Up 32%.) This received a takeover bid a number of months back. Smoking has actually not declined to the degree that you might think, and prices have held up much better than would be expected.