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Here’s a heads-up on something interesting I’m watching today. It’s a small tobacco play flying under the radar, but there’s momentum building — and the timing could be perfect with all this recession talk floating around. Take a look.

TODAY’S TOP ALERT! 

22nd Century Group (Nasdaq: XXII)

Good morning, Folks,

I hope you’ve braced yourself for what’s sure to be an eventful trading day ahead.

Stock futures are actually up as of this writing, which I attribute entirely to the “inverse Cramer effect.”

Over the weekend, Jim Cramer predicted that yesterday would be another Black Monday similar to the 1987 market crash — “the one where we went down three days and then down 22% on Monday.”

Of course, the Dow didn’t close the day even a full percent lower and the Nasdaq actually closed slightly higher.

Cramer was back at it yesterday, saying, “it’s likely we’re headed for a recession because of the president’s ill-advised plans.”

So naturally stock futures are up this morning 😂.

Cramer isn’t alone though. Goldman Sachs puts the odds of a recession in the next 12 months at 45%, and other firms have given similar odds.

Investors have begun cycling into recession plays, including tobacco. Check out this interesting chart:

Companies that produce tobacco products are up nearly 20% for the year even as the S&P 500 is down nearly 14%.

Yes, if you’ve been paying attention to the markets, some stocks are actually moving higher this year!

In fact, one of my favorite stocks right now, Philip Morris (PM), is up nearly 26% YTD.

This brings me to my “tactical trade” idea for today. It’s a small tobacco stock that ripped more than 50% in two days when I alerted it back in September.

The stock has had some incredible surges since then, but on the whole it has trended down.

I’m looking at this one right now as a recession-fear play and as a “bottom bounce” play.

Go ahead and pull up the chart for 22nd Century Group Inc (XXII).

As you can see, there was some real buying pressure yesterday, especially into the close, and the stock ended the day up nearly 5%.

The stock is floating just above $1.00, and if you’ve followed me for a while, you know I really love stocks around that level because of the Nasdaq minimum price rule.

I’ve found that companies will work very hard to keep the stock above that price.

There’s a chance yesterday could mark an inflection point for the stock... 

XXII can obviously move very quickly. Make sure it is on top of your watchlist right now.

👉  XXII is TODAY’S #1 ALERT 👈

Beyond its stock action, XXII is a fascinating company that could help save millions of lives…

It has started something truly groundbreaking, and with some tweaks to branding and marketing that are already underway, it could be looking at a very bright future.

You see, XXII has a truly unique selling proposition…

Headquartered in Mocksville, NC, the company developed the first market-ready, reduced-nicotine-content tobacco plants, which it uses in cigarettes containing 95% less nicotine. The cigarettes are branded “VLN” which stands for “very low nicotine.”

Its 60,000-square-foot facility in Mocksville has the capacity to produce 45 million cartons of combusted tobacco products annually and has additional space for expansion.

The company received the first and only FDA Modified Risk Tobacco Products (MRTP) authorization for a combustible cigarette in December 2021.

That authorization is reserved for products that “will significantly reduce harm and the risk of tobacco-related disease to individual tobacco users and benefit the health of the population as a whole.”

As you’ve probably heard, one of the things that makes cigarettes so addictive is the smoking “ritual.” From lighting up to the hand-to-mouth pattern, smoking is a fixation that’s difficult to break.

The trouble is that traditional “help-you-quit” products such as nicotine gum and patches do not satisfy the ritual. That’s where XXII’s products come in.

Using breakthrough, patent-protected IP to control nicotine biosynthesis in the tobacco plant, the company produces cigarettes and similar products with 95% reduced nicotine.

These products allow users to satisfy the smoking ritual while ultimately setting them on the path to quitting.

And the company notes:

“Numerous independent scientific studies, funded largely by the FDA, the National Institutes of Health (NIH), and other U.S. federal government agencies, have demonstrated that using reduced nicotine content tobacco cigarettes helps smokers reduce their nicotine exposure and dependence, smoke fewer cigarettes per day, increase their number of smoke-free days, and double their quit attempts – all with minimal or no evidence of nicotine withdrawal or compensatory smoking.”

As part of its “Comprehensive Plan for Tobacco and Nicotine Regulation,” the FDA has proposed setting caps on the amount of nicotine allowed in cigarettes.

As this 2023 article notes, this plan “would prohibit the sale of almost all cigarettes that are currently available on the market.” 

It goes on:

“That is the case because the FDA has authorized the sale of only two very low nicotine cigarettes that are manufactured by 22nd Century Group — VLN King and VLN Menthol King, which have approximately 95% less nicotine than an average cigarette.” (emphasis added)

In January of this year, the FDA’s proposal cleared review by the U.S. Office of Management and Budget.

Later that month, the Washington Post published this story:

The article noted that XXII’s cigarettes are “the only smokable tobacco products the Food and Drug Administration allows to be marketed as lower risk for nicotine exposure.”

The stock surged on the news, and the next day, the FDA published its 330-page proposed rule.

While this was a move by the outgoing Biden Administration, XXII points out that the policy “has been advanced across multiple administrations since 2009, including action under the first Trump administration.”

Any moves to advance low-nicotine cigarettes would obviously be fantastic for XXII, and it’s well worth watching it for any developments.

Ultimately, XXII wants to create an entire reduced-nicotine-content product category, similar to decaf coffee, non-alcohol beer, and non-alcohol spirits.

For that goal, it has a contract manufacturing operations (CMO) side of its business which manufactures low-nicotine products for other brands.

The company says it “remains committed to licensing its reduced nicotine content technology and products to every tobacco manufacturer, thereby, enabling industry-wide compliance with the FDA’s proposed nicotine caps.”

XXII launched its in-house VLN cigarettes in June of 2023. By November of that year, the cigarettes were retailing in more than 5,100 stores spanning 23 states.

In a conference call for investors last August, CEO Larry Firestone said that while the company believes it has a product that will change people’s lives, new branding is needed “to ensure product presence resonates with smokers so they try the brand and develop brand loyalty.”

In January, completed a new manufacturing agreement with Smoker Friendly, “one of the largest independent cigarette retailers in the United States.”

The five-year agreement covered 11 existing products and eight new premium products to be launched in Q2 2025. Here is the branding:

XXII says it “expects to reach EBITDA breakeven by Q4 2025, driven by stabilized CMO sales, a revamped VLN® (first-to-market 95%-reduced nicotine cigarette) strategy, and disciplined expense management.”

And in an investor call last month, CEO Larry Firestone said the company expects to launch a new webpage and social media imminently.

Those are some things that jumped out to me about the company. Be sure to check out its website as you do your own research.

And of course, always approach your trading in a responsible manner. Trading is very risky, and nothing is ever guaranteed, so never trade with more than you can afford to lose. 

Please read the full disclaimer at the bottom of this email as well so you are aware of additional risks and considerations. Always have a well-thought-out game plan that takes your personal risk tolerance into consideration.

Bottom line: XXII has flown under investors’ radar as recession-fear tobacco play, and yesterday’s nearly 5% gain could mark an inflection point.

It’s a truly unique and innovative company with regulators’ tailwinds at its back, and its ongoing course corrections could send its stock price significantly higher.

No guarantees, of course, but I think XXII should be at the top of your watchlist today.

To Your Success,