Core Insights - The individual has a strong interest in financial markets, particularly in fundamental analysis, which evaluates actual company performance rather than stock price movements [1] - The focus is primarily on long-term investments in stocks and ETFs, with a preference for US companies, while also analyzing European and Chinese firms [1] - The banking sector is highlighted as a key area of interest, as it is essential for understanding economic health [1] Investment Approach - The investment strategy is characterized by a contrarian view, indicating a willingness to go against prevailing market trends [1] - The individual emphasizes the importance of macroeconomics in investment decisions, suggesting a holistic approach to market analysis [1]

Core Viewpoint - British American Tobacco (BAT) has experienced a 7% decline in share price in the month prior to the article, indicating potential challenges in its market performance [1]. Company Analysis - The article highlights the recent struggles of BAT's share price, suggesting that the pullback may present a buying opportunity for investors [1]. - The author, Manika, has over 20 years of experience in investment management and focuses on opportunities in the green economy, which may influence the future direction of BAT's strategies [1]. Industry Context - The green economy is identified as a generational opportunity, which could impact traditional sectors like tobacco, as companies may need to adapt to changing consumer preferences and regulatory environments [1].

Group 1 - Traditional combustible cigarettes remain the primary source of sales for British American Tobacco (BAT), and this trend is expected to continue in the near future [2] - BAT is expanding its portfolio of alternative nicotine products, which is attracting a growing consumer base globally [2] - Although BAT lost the first-mover advantage in heated tobacco to Philip Morris International (PMI), it leads in e-vapour products and ranks second in smokeless tobacco and nicotine pouches [2] Group 2 - The company profile of British American Tobacco in the Tobacco industry provides a comprehensive strategic analysis, including performance metrics, regional and sector shares, product developments, and market strategies [3] - The report covers various product categories such as cigarettes, cigars, smokeless tobacco, e-vapour products, and heated tobacco [4] - Data included in the report encompasses market sizes (historical and forecasts), company shares, brand shares, and distribution data [5] Group 3 - The report aims to provide insights into growth sectors, competitive positioning, and factors driving change within the tobacco market [7] - Key topics covered in the report include the current state of the market, exposure to future growth, competitive positioning, and key findings [7]

Analyst's Perspective - The analyst is bullish on British American Tobacco (NYSE: BTI) and has previously expressed optimism about the company's prospects [1] - The analyst is a seasoned value investor with nearly 20 years of experience, focusing on undervalued companies with a significant margin of safety, attractive dividend yields, and strong returns [1] - The analyst prioritizes companies with a solid earnings track record trading at less than 8x free cash flow, which aligns with his investment philosophy [1] Disclosure and Position - The analyst holds a beneficial long position in British American Tobacco through stock ownership, options, or other derivatives [2] - The article reflects the analyst's personal opinions and is not influenced by compensation or business relationships with the mentioned companies [2]

Group 1 - The article discusses the investment group The Dividend Kings, which aims to help investors safeguard and grow their money through high-quality dividend investments [2] - The team of analysts associated with The Dividend Kings provides resources such as model portfolios, buy ideas, and company research reports to assist members in making informed investment decisions [2] - The article emphasizes the importance of intelligent investing in dividend stocks, highlighting the community aspect where readers can learn from each other [2]

Investment Group Overview - The Dividend Kings is an investing group founded by Dividend Sensei, focusing on high-quality dividend investments to help investors safeguard and grow their money in all market conditions [2] - The group includes a team of analysts (Brad Thomas, Justin Law, Nicholas Ward, Chuck Carnevale, and Sebastian Wolf) who assist members in making more intelligent dividend stock investments [2] - Features offered by the group include 13 model portfolios, buy ideas, company research reports, and a thriving chat community for readers to learn about dividend stock investing [2] Analyst's Position - The analyst has a beneficial long position in BTI shares through stock ownership, options, or other derivatives [2] - The article expresses the analyst's own opinions and is not influenced by compensation or business relationships with any mentioned companies [2]

Group 1 - Notable yield declines have been observed across most high-income generating asset classes over the past couple of quarters [1] - The main factors driving these yield declines include reducing base rates, normalizing inflation, a relatively strong economy, and solid earnings reports [1] Group 2 - Roberts Berzins has over a decade of experience in financial management, assisting top-tier corporates in shaping financial strategies and executing large-scale financings [2] - Significant efforts have been made by Roberts to institutionalize the REIT framework in Latvia to enhance the liquidity of pan-Baltic capital markets [2] - Other policy-level contributions include the development of national SOE financing guidelines and frameworks for channeling private capital into affordable housing stock [2]

Core Viewpoint - British American Tobacco (BTI) offers a high dividend yield of 8.1%, significantly higher than the S&P 500's 1.2% and the average consumer staples' 2.6%, attracting income-focused investors [1][8] Company Overview - British American Tobacco is one of the largest cigarette manufacturers globally, with combustible products making up around 80% of its revenue in the first half of 2024, primarily from cigarettes [2] - The company has a truly global presence, unlike its main competitors Altria and Philip Morris International, which operate primarily in North America [3] Volume Trends - Cigarette volumes have been declining, with a 5.1% drop in 2022, 5.3% in 2023, and a 6.8% decline in the first half of 2024, indicating a worsening trend [4][5] - If the decline continues at a rate of 5% annually, volumes could fall from 250 billion units in 2024 to less than 200 billion by 2029, posing a significant challenge for the company [6][7] Pricing Strategy - The company has managed to offset volume declines through price increases, but there is a limit to how much prices can rise without negatively impacting sales [5] New Categories - British American Tobacco is investing in new categories such as vaping and smokeless tobacco pouches, which saw a volume increase in the first half of 2024, although this segment still represents less than 3% of total revenue [8][9] Investment Risks - The high dividend yield is attractive, but the ongoing declines in cigarette sales present substantial risks, making it unsuitable for conservative dividend investors [10]

Group 1 - The analyst issued a bullish thesis on British American Tobacco (NYSE: BTI) early in 2024, making it one of the largest positions in their portfolio [1] Group 2 - The analyst has a beneficial long position in BTI shares through stock ownership, options, or other derivatives [3]

Industry Overview - The Zacks Tobacco industry is shifting towards smoke-free alternatives due to increasing consumer health awareness and stricter regulations against traditional cigarettes [1][4] - Major companies like Philip Morris International, Altria Group, and British American Tobacco are investing heavily in reduced-risk products (RRPs) to adapt to this market transformation [1][4] Trends Impacting the Industry - The rising popularity of smoke-free options is driven by health risks associated with smoking and government policies aimed at reducing cigarette consumption [4] - Tobacco companies are focusing on innovations in RRPs to enhance user experience and energy efficiency, leading to substantial revenue growth in this segment [4] - Pricing power remains strong in the industry, allowing companies to offset declining cigarette sales volumes despite inflation and changing consumer preferences [2][5] Challenges Facing the Industry - The tobacco industry is experiencing challenges from inflation and changing consumer behavior, which have contributed to reduced cigarette sales volumes [6] - Regulatory restrictions on sales and advertising due to health concerns are also impacting traditional cigarette sales [6] Industry Performance - The Zacks Tobacco industry ranks 44, placing it in the top 18% of over 250 Zacks industries, indicating robust near-term prospects [7][8] - The industry has gained 29.1% over the past year, outperforming the broader Zacks Consumer Staples sector, which grew by 5.5% [10] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 11.88X, compared to the S&P 500's 22.63X and the sector's 17.28X [11] Company Highlights - **Philip Morris International**: Focused on smoke-free products, aiming to transform into a primarily smoke-free company by 2030, with significant growth from its premium smoke-free brands [13][14] - **Altria Group**: Navigating market uncertainties with strong pricing power and investments in smoke-free products, including the acquisition of NJOY Holdings [15][16] - **British American Tobacco**: Aiming for over 50% of revenues from non-combustible products by 2035, leveraging a multi-category approach to meet global demand for lower-risk nicotine options [16][17]