Reynolds American (NYSE: RAI) is the second-largest U.S. tobacco company, responsible for about one of every three cigarettes sold in the country. The company sells some of the leading U.S. cigarette brands, including Camel, Kool, Pall Mall, Winston, Salem and Doral. RAI is also the second-largest manufacturer of smokeless tobacco products through its Conwood division. Unlike competitors Altria Group (MO) or Lorillard, RAI does not have a single premium brand, like Marlboro or Newport. Instead, the company has focused on three key brands -- Camel, Kool, and Pall Mall, which together account for roughly a third of the company's revenue and receive more than three quarters of the company's marketing budget.

The company is U.S. centric and will find it difficult to grow internationally having sold the international rights of its cigarette brands to Japan Tobacco. RAI, along with its competitors, also continues to face pressure from tobacco litigation.

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