Top 4 Tobacco Stocks: Which Are Poised to Catch Fire?

(Tobacco earnings preview updated with with Morgan Stanley analyst commentary.)
NEW YORK (TheStreet) -- Tobacco stocks have generated significant investor heat of late.

While the tobacco bulls continue to emphasize the group's steady and satisfying yields, the bears continue to point out the decline of the U.S. tobacco market, the social stigma attached to smoking, tough regulations, lawsuits and a host of other ever-present challenges facing the tobacco industry.

As Moody's noted in its most recent report on the tobacco industry: "We expect cigarette sales volumes to decline 3% to 4% per year through 2012 due to higher excise taxes, increased regulation and public bans on smoking." All of which sounds dire, yet later in the report, Moody's points out that "despite this continuing secular decline in cigarette sales, tobacco companies have maintained high profitability through price increases, cost cuts and growth in adjacent categories such as smokeless tobacco and cigars."

Furthermore, Moody's outlook for the U.S. tobacco sector is stable.

Hot Tobacco Stocks: Altria, Philip Morris International

"This outlook expresses our view that fundamental credit conditions in the industry will neither improve nor weaken materially during the next 12 to 18 months." Indeed, for every bear case scenario for the major tobacco stocks, there always seems to be a neutral to bullish stance to match -- but which side has the edge?

Here then, TheStreet presents four of the largest tobacco stocks and analysts views about them ahead of their soon-to-come quarterly earnings reports. Read on to see which stocks appear ready to catch fire -- and which are poised to go up in smoke....