Why Turning Point Brands (TPB) Could Be a Top Tobacco Stock in 2025

The tobacco industry is undergoing a seismic shift, with traditional cigarette sales declining as consumers turn to smokeless alternatives, nicotine pouches, and hemp-based products. Among the companies navigating this transition with agility is Turning Point Brands, Inc. (TPB), a manufacturer of smokeless tobacco, nicotine pouches, and cannabis accessories. As of early 2025, TPB’s strategic moves and financial performance suggest it could be a standout investment in the sector. Let’s dissect the data to see if this stock deserves a place in your portfolio.

A Strong Foundation in Smokeless Tobacco

TPB’s core strength lies in its Stoker’s Products segment, which includes moist snuff and chewing tobacco. These products contributed significantly to the company’s 10.95% year-over-year revenue growth in 2024, pushing total annual revenue to $360.66 million. This outperformance was fueled by strong demand for smokeless tobacco, a category less regulated than cigarettes and often associated with higher profit margins.

Beyond its traditional products, TPB has diversified into high-margin innovations like Alp nicotine pouches, which pre-orders “exceeded expectations,” and Zig-Zag’s hemp-based tobacco-free wraps. These moves align with a broader industry trend toward reduced-risk alternatives, positioning TPB to capitalize on shifting consumer preferences.

Financials Signal Resilience and Growth

TPB’s financials for 2024 reflect both stability and momentum:
- Net income rose 3.5% to $39.81 million, with diluted EPS reaching $2.27.
- Analysts have awarded TPB an average “Strong Buy” rating, with a 12-month price target of $68.75 (a 11.79% upside as of April 2025).
- The company’s trailing P/E ratio of 17.54 is reasonable given its growth trajectory, especially compared to peers like Altria (MO) or British American Tobacco (BTI).

The upcoming Q1 2025 earnings release on May 6, 2025, will provide clarity on whether this momentum continues. Analysts forecast $109 million in net sales and $0.68 EPS, representing 12.87% revenue growth year-over-year. If TPB meets or exceeds these targets, it could reinforce its position as a leader in alternative nicotine delivery systems.

Dividend Discipline and Strategic Shifts

Investors seeking steady income will appreciate TPB’s consistent dividend increases. The company raised its dividend in late 2024, and the most recent quarterly payout of $0.075 per share (March 2025) underscores its financial health. While this yield (~0.5%) is modest, it complements capital appreciation potential.

Crucially, TPB has reduced reliance on vaping products—a category facing regulatory headwinds—and pivoted toward higher-margin smokeless and hemp-based offerings. This strategic shift is paying off: Alp nicotine pouches alone have generated buzz, aided by marketing partnerships like the one with conservative media figure Tucker Carlson.

Stock Performance and Market Sentiment

TPB’s stock has been volatile in early 2025, rising over 87% in prior periods due to its product innovation but facing dips in March (e.g., a 20.5% drop from $72.54 to $57.65 between March 3 and 21). However, the rebound to $61.52 by April 30 suggests investors are pricing in optimism ahead of Q1 results. The stock’s average trading volume also surged during earnings-related events, indicating heightened investor interest.

Risks to Consider

No investment is without risks. TPB faces:
1. Competitive pressure: Nicotine pouches are a crowded space, with rivals like Swedish Match (SWMA) and Swedish snus brands.
2. Regulatory uncertainty: The FDA’s scrutiny of flavored tobacco products and nicotine content could impact margins.
3. Earnings miss: If Q1 results fall short of forecasts, the stock could suffer a correction.

Conclusion: TPB’s Case for “Buy”

Despite these risks, TPB’s diversified product portfolio, strong analyst sentiment, and financial discipline make it a compelling buy. Key data points:
- 2024 revenue growth of 10.95% and a 17.54 P/E ratio suggest it’s undervalued relative to its growth prospects.
- The $68.75 price target implies a $4.75 upside from its April 30 close of $61.52, supported by upcoming earnings and product launches.
- Alp’s strong pre-orders and the relaunch of the FRĒ brand position TPB to capture market share in high-margin segments.

Investors should monitor the May 6 earnings report closely. If TPB delivers on its Q1 guidance, this stock could outperform peers in 2025. With a mix of income and growth potential, TPB is a name to watch in the evolving tobacco landscape.