Watch sterling for this one, sterling goes up, BATS goes down, because of dollar earnings out of the US. Though the stock is very cheap right now.
I agree with this. Though the stock is very cheap on FinancePolice.com , sterling goes up pretty fast.
Over the long term growth in tobacco companies is going to come from Emerging Markets.
I don’t think BATS would be my first choice in this regard - but I do not follow tobacco companies to any great extent.
Companies are usually “cheap” for a reason, so I would definitely do a deep dig on if the cheapness is justified.
Jack, thats exactly the reason why i’m waiting for Philip Morris International to come into FT. Hopefully that day wil come!
BATS is as cheap as it has been, especially at the £23 low. EM growth is nothing to be proud of, it becomes worthless when it is converted into dollars or pounds. Until productivity rises in EM countries, it’s really not worth it to collect rupees or pesos.
If I had to pick one stock to buy, it would be MO. They went into JUUL, earn most of their revenue in dollars and have the Marlboro Man to back them up. Vaping and Weed is the future, MO will take advantage of that.
Philip Morris was my pick also, they look to have a good EM expansion going on. Not to mention they seem solid in the vape sector too!
Unfortunately, they were not exciting enough to get support at the outset to be added, fingers crossed soon tho!
EM is not a currency play, is purely a numbers game… Sales in US and developed Europe are laughable when you compare it to the potential in Asian markets.
That said I do like the cannabis play so MO is another interesting shout, maybe better value than going direct exposure ATM?
The future is weed and vaping, the money generally is still in the US and Western Europe. Target those markets.
I think there is value in the traditional market (as an EM play) and the new age market (weed and vaping).
Unfortunately Phillip Morris is playing it safe at the moment on the cannabis front. Hopefully they are ready to move fast if they find an opportunity, as I would hate for them to miss out.
Altria would be my choice as a cannabis play (however I currently have direct exposure, and have for a long time). Philip Morris is definitely on my watch list tho as I think it the best traditional play ATM.
British American and Imperial are not causing me any excitement for the time being
FX messes with all these tobacco companies, since none are pure UK plays. We have a weak sterling right now, so dollar earners are a no-no. US will not raise rates again in 2019, BOE may go once. This will push sterling up even more, hurting IMB and BATS further.
Your best bet is to find a UK sin stock, something domestic. Anything international is poorly positioned right now.
I don’t play with FX, I just stick to fundamentals!
Currency calls have not been a strong suit for me historically. I have found greater success from ignoring them, and their effects dissipate over the long term.
Good luck to you, if your predictions pay out then UK domestics are the place to be. Any UK domestics you think are trading significantly below their true value at the moment?
Aviva has a lot of upside, it will move with sterling. They lack a CEO and results are out March 7th 2019, could very easily move to £5 before the year is over.
Legal and General is my favourite insurer of all time, the management is top notch. Though the price can still move further up because of sterling. Very easily £3+ if we have a soft brexit or no brexit at all. I hold 3500 shares of Legal and General and would never sell 1.
Just Eat, this is a pure sterling play and the most volatile. Huge upside.
I would go with Just Eat if I had to pick one.
Greggs is overbought now, it was a good buy below £13. I hold Greggs but the most I paid was £15 and most of my holdings were at £10.
Paragon Banking Group is another one to look at, I like it below 430p. Good dividend, which rises every year. I also own this stock, but bought around 295p.
UK Insurers are definitely another sector trading at discounts am long myself Legal and General and also Direct Line Group.
DLG is another great play IMO - UK car insurance is mandatory by law which provides them with a large market. A favorite of Nick Martin and Alec Foster @ Polar Capital Global Insurance
Previously held Aviva, but the CEO thing concerned me, once they show a bit more direction I would consider moving back into them also.
Just Eat and Greggs are too pricey for me ATM.
Congrats on Paragon.
All the best
All I fear is a massive rise in sterling too fast, I am trying to go overweight UK domestic. I hold a lot of US stocks like Square, Apple, Facebook and Visa…which will be hurt when sterling moves up.
The best way to make money is to buy into uncertainty, once they appoint a CEO and deliver decent figures, Aviva stock will have moved over 460p already. Over £5 and it’s not worth looking at, unless you are holding for 10 years plus with the dividend.
Just Eat is worth looking at, it’s volatile as hell, a lot of speculators on it. But it’s a solid business if you want to play UK domestic. Most of the FTSE 100 is international, so you need to look at companies on the FTSE 250 mainly.