In the mid-1990s , 46 US states sued tobacco companies , causing “ fears the damages could wipe out the industry ’ s cashflows ”, says David Smith of the
Henderson High Income Trust . While the $ 246bn settlement in 1998 wasn ’ t as bad as feared , Smith says investors had begun to ditch old-economy stocks by then for anything internet related . Tobacco stocks entered the millennium on low valuations , but “ free cashflow became king ” after the dotcom bubble burst , according to
VT De Lisle America ’ s Richard de Lisle , and the sector re-rated . The FTSE 350 Tobacco index made 742.8 % by the end of the decade . dominance . Rather than rallying on speculation or debt , it went through a “ reverse bubble ” – it began the 2000s priced for disaster , before re-rating . The FTSE 350 Tobacco index finished the 2010s with a respectable 10-year gain of 125.3 %.
What happened next : Tobacco avoided the fate of the other four winners in this article , by sidestepping a collapse after its decade of
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