British American Tobacco: Consensus Bulls May Be Wrong Again (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• The market has proved my earlier 'Strong Sell' rating correct. I maintain my stance as I am skeptical of the bullish arguments based on low-valuation and non-combustibles product growth:
• Combustibles still matter most above all else; more than new growth products, more than the new CEO and more than ESG.
• New categories do not move the needle; they are too small and growing too slowly to make a difference.
• The secular decline in combustibles may be stronger than it seems as volume declines continue even as alternative data shows inflationary pressures to have reduced.
• As expected earlier, the stock has de-rated even further. I believe it will continues to be a value trap unless there is a radical business diversification.

Read the full article here.