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Yahoo
02-05-2025
- Business
- Yahoo
Is British American Tobacco p.l.c. (BTI) Among the Best Tobacco and Cigarette Stocks to Buy Now?
We recently compiled a list of the 10 Best Tobacco and Cigarette Stocks to Buy Now. In this article, we are going to take a look at where British American Tobacco p.l.c. (NYSE:BTI) stands against the other Tobacco and Cigarette stocks. Cigarette and tobacco stocks are companies that produce and sell cigars, snuff, chewing tobacco, cigarettes, e-cigarettes, and all other tobacco products. The tobacco industry has long been a huge winner for investors. Tobacco companies were among the top performers during the 20th century because of their reputation for providing investors with substantial dividend yields as well as their addictive, extremely profitable, and recession-proof product. However, tobacco firms now confront a different set of challenges. Globally, smoking rates have been progressively declining, particularly in the United States, as a result of growing legislation and health concerns. The industry has attempted to shift to next-generation products as a result. Some people believe that e-cigarettes, vaporizers, and chewable nicotine pouches are healthier options since they avoid some of the negative aspects of smoking cigarettes, such as unpleasant odors. Some companies are expanding beyond tobacco, working with cannabis businesses to capitalize on the potential development in a market that shares numerous similarities with tobacco. There are other hazards associated with tobacco stocks, such as heightened regulation and a decline in smoking rates. According to the Centers for Disease Control and Prevention, the number of tobacco farms in the United States decreased from 93,530 in 1997 to roughly 3,000 in 2022. Nonetheless, the USA was the world's fifth-largest producer of tobacco in 2021, harvesting 431.6 million pounds in 2022, compared to 1.74 billion pounds in 1997. Seventy-seven percent of U.S. production came from North Carolina or Kentucky. Price reductions accounted for $5.7 billion (72%) of the $8.6 billion tobacco businesses spent on advertising in 2022, which included $572.7 million for smokeless tobacco and $8.01 billion for cigarettes. Marketing costs for e-cigarettes came to $859.4 million in 2021. Sales of cigarette packs fell from 12.5 billion to 9.1 billion packs between 2015 and 2021, a 27% decrease. In 2024, the average cigarette tax in each state was $1.93, while the federal tax was $1.01. Despite the industry's weak revenue and profit development, investors continue to be drawn to these stocks due to their consistent dividends, profitability, and solid profit margins. Investors believe that stronger growth will eventually be catalyzed by next-generation products. However, on April 2, 2025, the U.S. Supreme Court upheld the FDA's decision to deny approval for flavored e-cigarettes in a major decision. According to Justice Samuel Alito, vape producers were given 'adequate notice' of the FDA's review criteria. In this case, businesses like Vapetasia and Triton Distribution applied for certification for products such as 'Mother's Milk and Cookies' and 'Killer Kustard Blueberry.' The FDA has been regulating vaping products since 2016, claiming that flavored vapes represent a health concern and may encourage young people to use tobacco. More than 2.1 million youths in the US reported using e-cigarettes in 2023, with 10% of high school students vaping. The FDA has rejected thousands of flavored products and has only approved tobacco and menthol flavors. One specific issue, marketing plan consideration, was returned to lower courts after the Supreme Court reversed the 5th Circuit's prior criticism of the FDA's changing criteria. Companies that promote unapproved products risk 'civil and criminal penalties,' the FDA warned. A close-up of an array of tobacco products, emphasizing the selection and consumer choice. For this article, we sifted through the online rankings to form an initial list of the 15 Tobacco and Cigarette Stocks. We have also included e-cigarette and cannabis companies. From the resultant dataset, we chose 10 stocks with the highest number of hedge fund investors, using Insider Monkey's database of 1009 hedge funds in Q4 2024 to gauge hedge fund sentiment for stocks. We have used the stock's market cap as of April 25, 2025, as a tie-breaker in case two or more stocks have the same number of hedge funds invested. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here). Number of Hedge Fund Holders: 25 In 2017, British American Tobacco p.l.c. (NYSE:BTI) acquired Reynolds American for $49 billion, which helped it grow into a major player in the market. In addition to next-generation goods like Velo nicotine packets, Vuse for vaporizing, and Glo for smoking HNB, the firm now owns a variety of well-known cigarette brands, including Camel, Newport, Dunhill, Natural American Spirit, and Lucky Strike. It is ranked fourth on our list of the Best Tobacco Stocks. British American Tobacco p.l.c. (NYSE:BTI) is committed to making a significant shift to next-generation products, just like other tobacco companies. The company's cigarette sales volume dropped 6.8% to 250 billion in the first half of 2024. Nicotine pouches have become the new category sector with the fastest rate of growth, with revenue rising 44% to 311 million pounds (about $411 million at current exchange rates) and volume sales up 43% in the first half. Nonetheless, cigarettes continue to generate the great majority of the company's income. The company stated that it was unlikely to reach its 2025 revenue target of 5 billion pounds (almost $6 billion) from next-generation items in July because of a U.S. crackdown on single-use products. Velo, the main pouch brand owned by British American Tobacco p.l.c. (NYSE:BTI), has been growing in popularity, particularly since the launch of Velo Plus, a new product line that offers softer, larger pouches, more nicotine, and more affordable prices. The company's Velo has performed exceptionally well; in March 2025, its 4-week rolling volume share in the U.S. reached 7.9%, representing 185% year-over-year growth. Velo Plus alone took a 5.4% market share just 12 weeks after its debut and currently accounts for over 70% of all Velo sales. Investing in British American Tobacco p.l.c. (NYSE:BTI) offers exposure to the tobacco industry globally, not just in the United States or globally, which is a benefit over Altria and Philip Morris. The business also offers a variety of other products, such as heated tobacco, chewing tobacco, vaporizers, and cigarettes. Overall, BTI ranks 4th on our list of the 10 Best Tobacco and Cigarette Stocks to Buy Now. While we acknowledge the potential of Tobacco and Cigarette companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than BTI but that trades at less than 5 times its earnings, check out our report about this . READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
06-04-2025
- Business
- Yahoo
Is British American Tobacco p.l.c. (BTI) the Best Counter Cyclical Stock to Buy According to Analysts?
We recently published a list of . In this article, we are going to take a look at where British American Tobacco p.l.c. (NYSE:BTI) stands against other best counter cyclical stocks to buy according to analysts. Counter cyclical stocks stand out because they tend to perform well during economic downturns, providing relative stability when markets become volatile. These resilient companies typically operate in more defensive sectors like utilities, consumer staples, and healthcare, offering products and services that consumers need, no matter how tight their wallets become. Furthermore, the truly counter cyclical stocks are the ones that experience accelerations in growth during recessions, due to consumers actively searching for ways to save money – think of discount stores or cheap clothes retailers. What makes the best counter cyclical stocks especially compelling is their stability during downturns: investors seek refuge in these stocks because they tend to maintain (or even increase) their value while other market segments struggle. Financial theory, as pioneered by Markowitz' modern portfolio theory (1952), suggests that including counter cyclical stocks in a portfolio can improve the overall risk-adjusted returns by significantly reducing volatility while at the same time not impairing the return profile. Modern literature emphasizes that effective diversification can be achieved by combining financial assets whose returns are inversely correlated to one another; counter-cyclical stocks align well with this principle due to their low or even negative correlation with the broad markets. Empirical studies confirm that portfolios containing counter cyclical stocks tend to exhibit lower volatility and more stable returns during recessionary periods – this is a highly sought after trait by investors. The legendary fund manager Peter Lynch also emphasized the strength of stable companies in recessions; here's what he said: 'In economic downturns, invest in companies that make essential products; people will still buy toothpaste and food regardless of the economy.' READ ALSO: 10 Best Low Risk Stocks To Buy in 2025. We believe that the current market conditions are potentially suitable for investors to start considering adding the best counter cyclical stocks to their portfolios. The biggest problem we see with the current US stock market is that the Trump 2.0 Tariff Turmoil and a plethora of other aggressive shifts in the policy stance of the new administration are undermining consumer confidence in the future. Consumers, while still strong and healthy, exhibit a rapid deterioration in confidence – the Consumer Confidence Index dropped sharply in March to the lowest reading since January 2021. Even the Trump administration itself admits that its trade and DOGE policies might cause some slowdown in the short term but says they should lead to 'The Golden Age of America' in the long term. Furthermore, business surveys show that increasingly more people are expecting fewer jobs in the upcoming months. A sharp deterioration in both metrics has historically coincided with the onsets of several recessions, such as the dot-com bubble burst, the 2008 crisis, and the 2022 bear market. It is of no surprise that many reputable research boutiques, including Yardeni Research and Goldman Sachs, have recently significantly raised their odds that the US economy will enter a recession in 2025 (although the estimated probability remains below 50% on average). The drivers of a recession could be a potential one-time inflation shock from the tariffs expected for next week, a widespread slowdown in business Capex expectations that may trigger layoffs, as well as a more frugal consumer due to the overall uncertainty and deterioration in purchasing power. Under such conditions, counter-cyclical stocks could witness a significant acceleration in their business, which in turn may translate into superior returns compared to the broad market. We believe that the best counter-cyclical stocks are the ones that have significant potential upside according to analysts, as well as a proven track record of exceptional performance during previous economic cycles. We consulted business literature on the characteristics of the best counter cyclical stocks and manually selected 20-30 stocks with a history of performing well during economic downturns, such as the 2008 and 2022 bear markets. Then, we select the top 11 stocks with the largest average upside potential as estimated by analysts and rank them in ascending order. For each stock, we also include the number of hedge funds that own the stock as of Q4 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). A close-up of an array of tobacco products, emphasizing the selection and consumer choice. British American Tobacco p.l.c. (NYSE:BTI) is one of the world's largest tobacco companies, running a diverse product portfolio that includes traditional cigarettes, smokeless tobacco, and next-generation vaporizers and heated tobacco. The company owns iconic brands like Dunhill and Lucky Strike and operates globally in more than 180 countries. It leverages its strong distribution network, strict regulatory compliance, and harm-reduction strategies to remain competitive and maintain its market share. Demand for tobacco tends to remain stable regardless of economic conditions. British American Tobacco p.l.c. (NYSE:BTI) delivered organic constant currency results in line with guidance in the recent quarter, with group revenue growing by 1.3% YoY. Smokeless products now account for 17.5% of group revenue, with 3.6 million new Smokeless consumers added in 2024, reaching a total of 29.1 million consumers. Given the intensifying regulatory pushback against traditional smoking, BTI has made significant progress to remain competitive through alternative smoking products. The company also demonstrated strong financial discipline with operating cash conversion exceeding 100% for the 5th year and financial leverage trending down. Looking ahead, British American Tobacco p.l.c. (NYSE:BTI) expects to deliver revenue growth of around 1% in 2025. The company faces significant headwinds in Bangladesh and Australia, which are expected to impact 2025 group revenue growth by 1%. Despite these challenges, management remains committed to returning to 3% to 5% revenue and growth by 2026, driven by an improving US financial performance, strong growth from Velo globally, and the launch of new innovations across the New Categories segment. BTI has historically had a low beta and showed significant resilience during previous bear markets, which makes it one of the best counter cyclical stocks to consider. Overall, BTI ranks 5th on our list of best counter cyclical stocks to buy according to analysts. While we acknowledge the potential of BTI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than BTI but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
29-03-2025
- Business
- Yahoo
Is British American Tobacco p.l.c. (BTI) The Top High Dividend Yielding Consumer Defensive Stock To Buy?
We recently published a list of . In this article, we are going to take a look at where British American Tobacco p.l.c. (NYSE:BTI) stands against other top high dividend yielding consumer defensive stocks to buy. Consumer defensive stocks tend to perform well in uncertain times because they sell essential items such as household products, healthcare items, and food and beverages, among others. Such companies also tend to have a strong pricing power which helps them to easily pass on increasing costs to consumers. The US market continues to struggle due to concerns over tariffs, geopolitical issues, and politics. In such times, consumer defensive stocks offer a way to protect one's portfolio from this uncertainty. When such shares also offer a high dividend yield, it performs a killer combination, loved by defensive investors looking to park their money for reliable passive income. We therefore decided to come up with a list of the top 10 high-dividend-yielding consumer defensive stocks. To come up with the list of top 10 high-dividend consumer defensive stocks, we only considered stocks from the consumer defensive sector with a market cap of at least $10 billion and a dividend yield of at least 4%. A close-up of an array of tobacco products, emphasizing the selection and consumer choice. British American Tobacco p.l.c. is a nicotine and tobacco products maker. The company offers combustible cigarettes; heated, vapour, and modern oral nicotine products; and traditional oral products. It sells its products under different brands, including Rothmans, Natural American Spirit, Lucky Strike, Velo, Vuse, and Camel, among others. BTI stands out as a compelling investment opportunity in today's market because of its healthy dividend yield of 7.34%. With its discounted valuation and high dividend yield, the company provides a combination of growth and income generation to investors. The company's stock has performed well so far this year after an impressive 2024. The future guidance has a lot to do with this performance. As per the guidance, the expected revenue growth for 2025 is 1% while for 2026 it is 3% to 5%. Adjusted profits from operations are projected to grow by 1.5% to 2.5% in 2025, followed by a 4% to 6% estimated growth in 2026. CFO Soraya Benchikh echoed similar optimism about the company's future by saying: 'Having achieved close to GBP 900 million in savings over the last 2 years, we are on track to deliver more than GBP 1.2 billion by year-end… Beyond 2025, we aim to simplify combustibles and drive scale benefits in New Categories, targeting an additional GBP 2 billion in savings by 2030.' BTI has consistently paid out a high dividend yield with its 5-year average at 7.7%. The buybacks add further shareholder value, making it our top choice for dividend investors. Overall, BTI ranks 1st on our list of top high dividend yielding consumer defensive stocks to buy. While we acknowledge the potential of BTI as a leading investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as BTI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: and . Disclosure: None. This article is originally published at . Sign in to access your portfolio
