Trading at under x7 EV/EBITDA, with a conceivable path of low to mid-single-digit growth, this company does not need to do anything extreme for the equity to produce outsized returns
Tobacco leaves on the bottom of the plant mature first
Begin talking with your kids about smoking and vaping in kindergarten
Economically, selling cigarettes is a fantastic business The first thing to note is that BAT sells a product which is, from a cold-hearted capitalistic point of view, very attractive: The vast majority of smokers smoke every day, so demand is very consistent Like many consumer goods, well-known brands have real power and many people smoke the same brand as their parents and peers There is huge brand loyalty, with most smokers sticking to one brand for decades The existing competitors are huge, with enormous economies of scale and tens of billions invested in supply chains Cigarette advertising is banned in many countries, which leaves more cash available for dividends and makes it harder for smaller or newer competitors to build awareness Nicotine is addictive, so smokers tend to keep smoking even if prices go up (they are price insensitive) Together, these factors create an industry where profits are high and consistent, where prices can be increased ahead of inflation and where new competitors are largely nonexistent
You should eventually remove the hand signal, but keep the clicker and reward
If you look at the history of where tobacco and tobacco companies have historically marketed and targeted, it is many times those low-income communities that already suffered disproportionately from smoking-caused disease, disability and death, she said
