Analyst Rankings: Smoking Out the Best Tobacco Analysts

This week TheStreet.com continues the weekly focus on winning analysts for each industry category from our Analyst Rankings -- Equity 2000 survey. However, we're digressing from the planned tech schedule to look at the top-ranked analysts in the tobacco industry, which has been prominent in the news lately. (For our last focus, on application software, click here.) Next week, we'll look at the pharmaceuticals sector.

Despite recent high-profile court cases targeting the tobacco industry, our top-ranked analysts see positive trends in the sector long-term. While all expect litigation to continue for the foreseeable future, they believe that the market has factored this variable into its pricing of cigarette shares. Let's hope so. Over the last year, the sector has underperformed the S&P 500 by about 40 percentage points.

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Two of the analysts profiled here argue that some of these stocks have been discounted too steeply. The market's reaction to the recently announced verdict in the Engle class-action lawsuit supports this theory. On July 14 a Florida jury slapped Big Tobacco with a whopping $145 billion in punitive damages. (See our related story.) But Wall Street barely reacted: Stock prices for cigarette makers slipped only about 3%. Just days after the verdict, two of the largest defendants in the case, Philip Morris (MO Quote) and R.J. Reynolds Tobacco (RJR Quote), released second-quarter earnings that met Wall Street expectations. Both stocks rose on the announcements. ...