IF YOU don’t mind investing in companies that literally kill their own customers, BAT seems a surefire winner.
The market took fright at yesterday’s guidance that sales growth would come off a touch this year.
But consider this — most other businesses are so messed up by Covid that they’ve refused to give any guidance at all.
Set against that lot of casualties, BAT’s warnings are a minor flesh wound.
What wouldn’t Bernard Looney at BP give for “only” 3% revenue growth this year? How much would Michael O’Leary at Ryanair or Wetherspoon’s Tim Martin be smiling if they could promise 5% profit rises?
Countries such as South Africa and Argentina may have enforced tough lockdowns on smokers, with South Africa banning cig sales outright, but that won’t last. And, on all the evidence, most of BAT’s customers are just going to come back as soon as they can.
BAT remains a cash-making machine, which means it’s well capable of paying a chunky dividend.
And that’s what stocks like this are all about. Strong and stable, as Theresa May used to say in a bygone age.
But if you want a “growth” story, it delivers a bit there, too, with improving market positions in vaping and other ghastly-but-popular habits. Snus, for example, where you stick a cancer-inducing pouch of ‘baccy under your lip like a Dukes of Hazzard redneck. All the rage in Norway, apparently.
The industry scored a spectacular own goal by pumping out vapes with sweet, fruity flavours bound to hook in kids. US laws have now clamped down. But that scandal is all priced in to BAT shares which are down 43% in the past three years.
They may not beat a dash-for-trash market rally in the next few weeks, but with a dividend yield of nearly 7%, for long-term value, they’re a steal.
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