The tobacco industry is facing increasing pressure from regulators and ESG-focused investors globally as the world looks to transition towards a smoke-free future. Moreover, lackluster sales growth in combustible tobacco products is keeping top tobacco stocks subdued. Still, a slew of promising factors make tobacco giant British American Tobacco (NYSE:BTI) (GB:BATS) a key name to keep an eye on.
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BTI’s Dividends and Buybacks
For starters, BTI offers a mouth-watering dividend yield of 9.27%. The company recently offloaded its partial stake in Indian consumer products major ITC for net proceeds of £1.57 billion. BTI plans to use these proceeds to execute share repurchases to the tune of £700 million this year and £900 million next year.
While the steady decline in combustible tobacco products paints a gloomy picture, BTI’s non-combustible product offerings look promising. The company’s products in this category include Vuse, Glo, and Velo.
The “Burry” Factor
Another factor that has piqued investor interest in BTI over the past few days is Michael Burry’s interest in the company. Burry, who became famous for his “Big Short” during the 2008 crisis, counts BTI as one of his top holdings. But Burry isn’t the only top stock picker interested in BTI; Ken Fisher’s Fisher Asset Management has also recently increased its BTI holdings.
What Is the Price Target for BTI?
It’s no wonder then that BTI shares are already up by nearly 11% over the past six months. Analysts see a further 9.2% potential upside in the stock, based on a Moderate Buy consensus rating and an average BTI price target of $34.
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