Wednesday 28 September 2016

Tobacco remains hugely attractive area for investors insists Soc Gen

Published 05/06/2016 | 02:30

In the briefing document Soc Gen said 'within consumer staples our preferred subsector is tobacco - due to attractive valuations, consistent growth and cash generation' (stock photo)
In the briefing document Soc Gen said 'within consumer staples our preferred subsector is tobacco - due to attractive valuations, consistent growth and cash generation' (stock photo)

The tobacco sector is the area most attractive for investors looking at consumer staples, say analysts at Societe Generale (Soc Gen).

  • Go To

In a recently circulated investor briefing document seen by the Sunday Independent, Soc Gen says that "within consumer staples our preferred subsector is tobacco - due to attractive valuations, consistent growth and cash generation."

Soc Gen has 'buy' ratings on Imperial Brands (formerly known as Imperial Tobacco) which owns the Drum and Winston brands, and British American Tobacco (BAT), which owns the Dunhill and Lucky Strike brands.

The briefing document contains sets of 15 questions for management at a range of companies including the two tobacco groups, Greencore, Aryzta, Kerry Group and Glanbia.

The comments on tobacco companies' attractiveness come amid a push in some countries, including Ireland, to introduce plain-packaging of cigarettes.

One of Soc Gen's suggested questions for British American Tobacco management is: "what is the risk of contagion to other markets (both inside and outside the EU) once Ireland/UK/France have gone plain?"

The document also notes that BAT appears to have turned around former problem markets of Turkey and Mexico. One of the suggested questions for Imperial is to ask what it is doing to build a bigger presence in Asia and Africa.

Sunday Indo Business

Read More

Promoted articles

Editors Choice

Also in Business