British American Tobacco: It's Still A Value Trap, But I'm Lifting My 'Sell' View (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

• My latest third 'Sell' view on British American Tobacco generated alpha of +4.40% once again vs the S&P 500. But now I am changing my stance to a 'Neutral/Hold'.
• BTI's combustibles' volume performance woes continue, particularly in the US, driven by a secular demand decline, weak US consumer spending and loss of share from illicit substitute vapor products.
• However, a V-shaped rebound in consumer sentiment can abate some of the combustibles' volume decline.
• I acknowledge that the transition to non-combustibles is occurring faster than expected. As that segment hits profitability, the company is also creating a leaner and more productive workforce. Yet, margins delivery has been below expectations.
• Valuations continue to be cheap, but I still don't see a meaningful catalyst to drive a sustained turnaround in stock performance. I am awaiting a retest on the technical to resume a 'Sell' bias.

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