Last Updated on 27 August 2022 by automiamo.com
An other difensive stock, difensive sector, with an actual interesting dividend.
My automated stock picking on British American Tobacco (NYSE: BTI) available with my app ginvesto
Here you can download the report in excel format
Giancarlo Pagliaroli
Disclaimer: The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by me.
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I have calculated a buy value at roughly $36 (fair value based on earnings forecast minus 20% margin of security).
Now we are at this price.
Chart is in the main volume cluster but is falling like the entire sector (PM and MO have the same beta – volatility – at the moment)
BTI is plus affecting now by the fear of american investors due to the falling of pound sterlin and voices are telling about a possible cut in USD dividend.
Maybe usd dividend could return from 7% to the 5% which is the tobacco sector’s dividend avarage. MO offers higher dividend at the moment but its economics and fair value are not in line with my strategies.
Looking the history, escluding the 80s, BTI did not performe bad during the falling of pound sterlin, and never a cut of its dividend in a big shot.
Tobacco sector is my preferred in line with the actual economic cycle , drop is good for buying lower, cash flows are strong and people will continue to smoke even during the recession.
Soaring inflation has made life harder for most of the world – but some people are still smoking expensive cigarettes.
People who smoke cigarettes tend to stay loyal to their brands even if they’re more expensive.
Sales of luxury tobacco products – cigars, cigarillos and smoking tobacco – are expected to rise 7.5%.
British American Tobacco (BAT) has raised prices more than its competitors in some categories and is investing more in its high-end New Port and American Spirit brands
From my report and automatic valuation on historic financial data, the fair value is estimated to be $45 considering earnings is forecast to grow by 4% per annum, P/E is forecast to be 15, over a 3 years of investment’s horizon.
The fair value is estimated to be $100 relying on future discounted free cash flows and free cash flow is forecast to grow by 8-9% per annum.
My app signal is respectively HOLD – relying on future earnings – and BUY – relying on future discounted free cash flows –
However this is not to be taken as a buy recommendation but rather be used as a guide only in my investment decisions