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Vapor Corp Is The Pure Play Way To Play Booming E-Cigarette Growth

April 23, 2015 | About:

Which industry will be the best one to own stocks in for the next decade? Of course it is impossible to know for certain, but one industry that investors should be aware of is the E-Cigarette business.

According to BIS Research the e-cigarette global market is estimated to grow to $39.6 billion by the end of 2024 which represents at 27.3% growth rates from 2014 until then. That is an astonishing rate of growth.

As can be seen in the image below, UBS/Wells Fargo are also predicting a very fast rate of growth for the industry with a near quadrupling of sales by 2017.

The growth in the industry over the next few years can be attributed to a few key factors. These would include:

- The health risks of traditional cigarettes being a concern

- Restrictions being imposed on traditional cigarettes

- The fact that e-cigarettes are not subject to the same marketing restrictions as tobacco cigarettes

- Lower cost for the consumer of e-cigarettes over tobacco cigarettes

- Tax advantages

- Continued advancements in product quality

What Is An Electronic Cigarette / Vaporizer?

Simply put an electronic cigarette is a battery operated device which simulates the experience of tobacco smoking without the inhalation of smoke.

Source of image: www.nationaljournal.com

Vaporizers feature a tank or chamber, a heating element and a battery. The vaporizer user fills the tank with e-liquid or the chamber with dry herb or leaf. The vaporizer battery can be recharged and the tank and chamber can be refilled.

In many cases vaporizers and electronic cigarettes may be used where tobacco-burning cigarettes may not. Vaporizers and electronic cigarettes may be used in some instances where for regulatory or safety reasons tobacco burning cigarettes may not be used.

Not always though as some states, cities and businesses have already banned the use of vaporizers and electronic cigarettes. The e-cigarette companies are therefore going to be relying more on the health benefits of their product because the advantage of being acceptable in public places may go away over time.

Source of image: Electroniccigarette123.com

Vapor Corp(VPCO)A Pure Play On This Market

Finding a way to get exposure to this industry is not easy. The Big Tobacco companies are aggressively moving in, but traditional cigarettes still make up almost all of their income. Vapor Corp is a NASDAQ listed, U.S. based distributor and retailer of vaporizers, e-liquids and electronic cigarettes.

Vapor Corp recently acquired the retail store chain "The Vape Store" as part of a merger with Vaporin, Inc.

Vapor Corp’s technology enables users to inhale nicotine vapor without smoke, tar, ash or carbon monoxide. Vapor Corp’s brands include Krave, VaporX, Hookah Stix and VaporinT and are distributed to and available at approximately 50,000 retail stores throughout the U.S. and Canada. The Company sells direct to consumer via e-commerce and Company-owned brick-and-mortar retail locations operating under "The Vape Store" and "emagine vapor" brands.

Following the acquisition of Vaporin, Inc. Vapor Corp now also owns 16 retail stores, including kiosks.

Vapor Corp’s products are broken in the following segments:

1) Disposable E-Cigs

Disposable electronic cigarettes feature a one-piece construction that houses all the components and is utilized until the nicotine or nicotine free solution is depleted.

2) Rechargeable E-Cigs

Rechargeable electronic cigarettes feature a rechargeable battery and replaceable cartridge (also known as an “atomizer or cartomizer”). The atomizers or cartomizers are changed when the solution is depleted from use.

3) E-Vaporizers

Vaporizers feature a tank or chamber, a heating element and a battery. The vaporizer user fills the tank with e-liquid or the chamber with dry herb or leaf. The vaporizer battery can be recharged and the tank and chamber can be refilled.

Vapor Corp – Vaporin Transaction Restructures The Balance Sheet

Vapor Corp’s recently completed the acquisition of Vaporin Inc brought with it an equity raise and the obtaining of a new financing commitment.

Post completion of the transaction the balance sheet of the combined companies (as indicated in the related SEC filing) is expected to have a significant current asset balance and no debt.

Pro Forma Balance Sheet Information

Total current assets $14,262

Intangible assets $1,750

Goodwill $16,169

Total assets $32,778

Total debt (current) $1,200

Total liabilities $4,141

Total stockholders’ equity $28,637

​source of data: sec.gov

This should put the company in a good financial position to push forward with its growth efforts.

Risks

This industry is going to have the wind at its back for a considerable number of years. That is the opportunity.

The risk is that small companies like Vapor Corp are competing with the 800 pound gorillas that are the biggest tobacco companies in the world. Given the financial strength of those companies the smaller operators face an uphill battle.

Stay tuned for more opportunities in this sector.


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