The Dow Jones U.S. Tobacco Index rose 15 percent from 2005 to 2006, an indication that tobacco companies are in good fiscal health despite the threat of lawsuits from sick smokers, the Associated Press reported Oct. 31.

The value of Reynolds American Inc. stock is up 52.3 percent, Loews Corp's Carolina Group is up 41.1 percent, British American Tobacco is up 26.5 percent, and Altria Group is up 8.8 percent.

Analysts say the companies are benefiting from stable demand, strong cash flow, and the potential for growth overseas. Companies are said to be less worried about lawsuits, as well, and analysts believe that the litigation environment in the U.S. may be improving for Big Tobacco.

Altria's recently announced divestment of Kraft Foods Inc. is seen as one sign of the latter. "I think today's announcement clearly shows to the world that the board is comfortable with the entire litigation environment, and is therefore prepared to move forward," said Altria CEO Louis Camilleri.