0A76 trade ideas
BTI: Great rand hedge and dividend playBTI seems to have bounced once again off the support line trend after a bit of a wobble given the concerns around menthol bans by the Biden administration in USA. This is bound to be a long protracted legal battle, in the interim, I really like this stable as she goes rand hedge offering a 8 %plus dividend yield.
BATS - Long - 25%The first analysis is about the tobacco company British American Tobacco.
The most important key data can be found in the picture above. Below you will find some further thoughts. (The moral aspect is not mentioned).
For years, the number of smokers in the world has been steadily decreasing. So why invest in tobacco when countries will ban it or tax it more in the future?
1) In my opinion, there will always be smokers and this will not change.
2) Tobacco companies can increase prices at the same time as taxes. However, this will stop very few smokers.
3) Even if it seems so to some, the corporations are not asleep! They are aware of the above mentioned decline. They are always working on alternatives (the so-called Risked Reduced Products).
4) Certain tobacco companies are also involved in companies that are in the cannabis business. The prognosis for this business is extremely promising and I doubt that the tobacco companies will not want to get a piece of the pie. Especially when you consider that tobacco is also involved, depending on the type of consumption.
In my opinion, entering the industry is worthwhile for anyone with a bit of patience and no moral qualms about it. Especially with a dividend payout of 6 to 7%!
Instagam: SSP_Switzerland
BTI An extract from my weekly research report.
British American Tobacco (57044c)| Positive Technical Outlook| The share's weekly RSI is looking to break above an 8-month resistance level and has breached the downward trend line extending back to it's peak of April 2020. The medium term (equity portfolio) upside target is around R630, just below the 200-week simple moving average. Weekly Chart.#TradingPlan #KeyLevels
British American Tobacco is looking quite attractiveThe stock has been hit by various issues including regulatory concerns in the US adding uncertainty to the earnings growth in the sector. The stock is down almost 60% from its all time high. Sounds like a fair de-rating in the stock. Lets consider it further...
The free cash flow is at 30% with a dividend yield of around 8% as shown below the chart. The debt to revenue ratio is at 1.71 which is a substantial reduction from 2.51 which is where it was at its all time high in 2017.
So the stock is down almost 60% from its all time high in 2017 and it's has a healthy free cash flow, attractive dividend yield and a reducing debt to revenue ratio. That sounds like an attractive entry point into a fairly healthy looking company, all else equal.
From a fundamental growth perspective, the next generation of tobacco products, including heat not burn products may give an attractive future revenue stream which apparently has high margins to it.
Again sounds attractive.
Please note, this idea is shared for educational and discussion purposes only and should not result in speculative investment decisions in any asset class.
Update - BRITISH AMERICAN TOBACCO - High Risk Short PuntAs pointed out on Monday BTI was showing weakness in a strong market environment.
Even with the weakening Rand yesterday the price stalled in the 560 region.
The short target for this trade was a quick move down to 540 which was reached with ease today and as pointed out if the price was able to break below 540 the next target would be 520. If the price manages to break below the 520 level we should see some long stops triggering.
I did start banking some profits in the region between 535 and 525 and will run the remainder of the position to see how the price reacts if we should reach the area below 520.
Update - BRITISH AMERICAN TOBACCO - High Risk Short Punt As pointed out on Monday BTI was showing weakness in a strong market environment.
Even with the weakening Rand yesterday the price stalled in the 560 region.
The short target for this trade was a quick move down to 540 which was reached with ease today and as pointed out if the price was able to break below 540 the next target would be 520. If the price manages to break below the 520 level we should see some long stops triggering.
I did start banking some profits in the region between 535 and 525 and will run the remainder of the position to see how the price reacts if we should reach the area below 520...
BTI 1D - A SMOKE SIGNALThe market is unsure of what to do. The weekly stochastics are not near overbought territory yet. Fundamentals of the company are good. You can take a short term punt if you have the unction to do it, Personally i would wait for the weekly 14 stochastic to catch up even though the ATR is giving a buy signal
BRITISH AMERICAN TOBACCO - High Risk Short PuntBTI was unable to close above the DMA 50 in the last 11 trading sessions. Now approaching the DMA 50 at 560.
This is a very high risk trade. My stop will be a daily close above 563. Looking for a quick move down to 540. If 540 can be broken then my downside targets will be 520 and 500.
BATS (UKX) - EW analysis - ABC zigzag down BATS (UKX) - It is underperforming UKX and within corrective mode. The down cycle is identified as ABC zigzag down, where B wave finished in triangle. The C wave is in progress and expected to move sharply down as it is in 3rd wave after small pull back.
Give thumbs up if you really like the trade idea/analysis.
