Philip Morris International Inc.

What does it do?

Philip Morris International sells cigarettes and, increasingly, smoke-free nicotine products to people around the world — everywhere except the United States. Their biggest bet right now is IQOS, a device that heats tobacco instead of burning it, which they market as a less harmful alternative to smoking. They also own ZYN, the small nicotine pouches you might have seen behind the counter at convenience stores. Think of them as a traditional tobacco giant that is trying to reinvent itself before cigarettes become obsolete.

How does it make money?

Philip Morris generates roughly $40.6 billion in annual revenue, up from $37.9 billion the prior year — a solid 7% increase driven largely by smoke-free products. Cigarettes still make up the majority of sales, sold in markets across Europe, Asia, the Middle East, and Africa. But IQOS devices and consumable 'HeatSticks' are growing fast, and ZYN nicotine pouches — particularly in the US — have become a genuine breakout product. The company's net income of $11.3 billion shows this is an extremely profitable business; for every dollar of revenue, they keep a lot of it.

Why do investors care?

The investment case is simple on paper: people are addicted to nicotine, and Philip Morris is trying to be the company that sells it to them in whatever form regulators allow. If smoke-free products like IQOS and ZYN continue growing, the company could actually increase its total user base even as smoking declines. Investors also love the dividend — PM has historically paid out a generous and growing income to shareholders. For the story to work, IQOS needs to keep gaining users in key markets like Japan and Europe, and ZYN needs to survive the regulatory scrutiny it is currently facing in the US.