The British American Tobacco Plc (BATS) was founded in 1902 as a joint venture between UK’s Imperial Tobacco Company and USA’s American Tobacco Company. The company’s founding chairman, James Buchanan Duke, helped lay an ambitious vision that has ultimately seen BAT become a leading player in the global tobacco industry. Headquartered in London, the British multinational now has a presence in over 180 countries and territories around the world. BAT has also built a well-diversified and strategic product portfolio that consists of over 300 brands such as Dunhill, Kent, Lucky Strike, Newport, Pall Mall, Grizzly, Camel Snus, Vuse, Velo, and Vype.
However, in the controversial tobacco industry, BAT’s journey has not been straightforward. The beginnings were rosy, with the company quickly expanding to new markets and by 1910, the company had exceeded annual sales of over 10 billion cigarettes. The company then experienced further success during World War I when cigarette use increased dramatically. However, during World War II, BAT’s business was severely interrupted, with the biggest impact being in China where Japanese forces seized major assets. The company quickly rebuilt itself and continued its global expansion. BAT’s growth was both organic and inorganic. In its early years, expansion involved establishing distribution networks that later evolved into fully-fledged subsidiaries. But over time, BAT made strategic acquisitions and mergers with quality companies such as Rothmans International, Tekel, Protabaco, CN Creative, and Reynolds American Inc. In recent years, acquisitions have been geared towards ensuring that the company builds ‘A Better Tomorrow’- a philosophy that proposes to reduce the health impact of BAT’s products.
British American Tobacco Plc is listed on the London Stock Exchange where it trades under the ticker symbol BATS (LSE:BATS). The company also has a secondary listing on the NYSE where it trades under the ticker symbol BTI.
BATS Stock History
The BATS stock is quoted in pence on the LSE. At the turn of the millennium, British American Tobacco plc share price was at around 300p, with the company facing unwanted attention from human rights groups following the controversial merger with Rothmans International. The stock, however, remained resilient and embarked on a long-term multi-year rally.
The British American Tobacco plc share price broke above 1000p in April 2005, and it managed to breach 2000p in December 2007 before a period of consolidation that was inspired by the 2008 Great Recession. It then resumed its uptrend in December 2009, sustaining another long-term rally that drove it to its all-time high above 5530p in May 2017. The subsequent market correction saw the stock tumble to below 2500p by December 2018. It then remained trapped in those depths as the global economy was impacted by the 2020 Great Lockdown. The BATS share price on the LSE only climbed above the 3000p-handle in January 2022.
British American Tobacco Plc operates a stable and cash flow positive business that has ensured it is able to pay consistent and sustainable dividend payouts to its investors. The British American Tobacco dividend per share has been generous in recent years, with investors enjoying yields averaging over 7.40%.
How to Trade BATS Stock
Here are some of the factors to consider when trading British American Tobacco stock:
- Legislative and Taxation Factors
Tobacco has been classified by the WHO as one of the leading causes of cancer and death in humans. This has led to tough legislation and taxation policies on tobacco products in different jurisdictions around the world. Tobacco products routinely attract high ‘sin tax’ as well as sudden legislative changes that may impact their packaging, marketing, or distribution. These factors can greatly influence BAT’s business margins, and consequently its stock price.
- New Product Rollout
As global consumers become more health-conscious, the rollout of new products is now a race for survival for tobacco companies. BAT has already rolled out an impressive portfolio of reduced-risk products (RRPs) that include vapour products, THP (tobacco heating products), as well as other traditional and modern oral products, such as moist snuff and nicotine pouches. With the use and demand of traditional cigarettes projected to continually decline, these new products can help cushion the company from weak revenues in the future.
BAT operates in a highly competitive industry where it has to compete for market share with equally big tobacco players such as Philip Morris, Altria, Imperial Brands, and Japan Tobacco International. Competition is based on factors such as brand recognition, brand loyalty, taste, new products, marketing, and pricing. Furthermore, in some of its operating jurisdictions, BAT’s rivals include state-owned companies that are given undue advantages in the market.
- Periodic Earnings Reports
The BAT financial year runs from January 1st to December 31st, and the company releases periodic earnings reports to update investors on their business health and performance. Some of the most important metrics to watch out for include the performance of important brands, adoption of new product categories, overall revenues and margins, dividend payouts, as well as sustainability reports. Strong numbers tend to drive the stock higher, whereas weak figures can pressure the British American Tobacco stock price lower.
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