British American Tobacco (LON:BATS) has enjoyed a very successful decade. Its shares have risen by 225%. That's 11x the capital gain of the FTSE 100, and 3.4x the return on its only UK-listed rival, Imperial Brands. However, I think British American Tobacco will in future enjoy an even more successful decade because it is acquiring the 57.8% of US tobacco company Reynolds which it does not currently own.
The deal will create the biggest tobacco company in the world. It has the potential to make larger investments than its rivals, produce cigarettes and e-cigarettes at lower costs than its peers, and take full advantage of its pricing power. It will also offer relatively high diversification and potentially lower risks than its peers due to its sheer size. As well as this, I believe British American Tobacco still has a relatively low valuation as well as bright income prospects. Therefore, I feel it's a strong buy for the long term.
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by Zak Mir | Trading | 1 mins. to read On a day curiously void of bombastic small-cap highlights, it seems appropriate to go for a situation which has classic fundamental merit, in the form of Venture Life (LON:VLG).
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