Secondhand smoke makes Standard Commercial gasp.

• Author: Williams, Christopher C.

Standard Commercial Corp. (STW-NYSE) is a stock only a contrarian could love. The tobacco-leaf supplier has been under a cloud of secondhand smoke from anti-cigarette publicity that has choked its share price. Since peaking at $31 in 1992, it has fallen to almost $11.

But the contrarian case is more than a crush. Leaf suppliers don't face the same legal liabilities as cigarette makers. Plus, Wilson-based Standard Commercial derives most of its tobacco sales internationally, which should protect it some if the domestic market dissolves. Still, worries about anti-tobacco fervor, plus poor financial results in recent years, have made the stock very cheap. At the end of May, it was trading at a price-to-earnings ratio of around 5.3, the lowest in the state.

It's the only remaining Tar Heel tobacco stock. At $1.3 billion in revenue, it's the third-largest tobacco dealer in the world, behind Richmond, Va.-based Universal Corp. and Danville, Va.-based Dimon Inc.

Expensive stocks (highest price-earnings ratios among North Carolina stocks) P/E Recent 52-week Company ratio price range Hampton Industries 184.0 $6.63 $6.25-9.77 Pluma 170.3 6.81 6.38-16.63 Waste Industries 105.4 22.13 15.25-27.75 Applied Analytical Industries 103.8 10.38 10.00-27.25 NewSouth Bancorp 65.6 34.75 24.00-35.50 Quintiles Transnational 57.9 48.63 29.63-52.44 Brad Ragan 57.8 38.75 20.00-39.00 Pharmaceutical Product Dev. 45.1 21.25 12.25-25.88 Texfi Industries 42.5 2.13 2.00-5.50 Cree Research 38.6 15.44 10.63-29.50 Source: Bloomberg Financial Markets Cheap stocks (lowest price-earnings ratios among North Carolina stocks) P/E Recent 52-week Company ratio price range Standard Commercial 5.3 $11.13 $11.13-18.19 Ridgeview 7.3 5.38 5.25-9.00 Speizman Industries 8.7 5.75 4.88-9.50 McRae Industries 10.7 7.38 6.88-10.25 Kewaunee Scientific 11.0 9.75 6.00-14.25 Reeds Jewelers 11.9 3.88 3.06-4.38 Market America 12.2 5.25 4.50-9.25 Winston Hotels 13.0 12.00 11.69-15.13 Fountain Powerboat Industries 13.4 10.25 8.13-16.25 Culp 13.5 17.50 16.75-22.19 Standard Commercial is the best-positioned to capitalize on overseas demand. It gets 75% to 80% of its tobacco sales abroad, five to 10 points above its chief rivals, according to Scott & Stringfellow Inc. analyst John Kasprzak. And it's building that business. In January it increased its stake in a Brazilian leaf dealer and in May bought a Spanish supplier. "There are growth opportunities," CEO Robert Harrison says, "and we're actively pursuing...