Why I think this FTSE 100 champion presents an opportunity


first_img Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. “This Stock Could Be Like Buying Amazon in 1997” Our 6 ‘Best Buys Now’ Shares Enter Your Email Address Any downturn in the market, such as the one we are experiencing now, throws up some interesting opportunities.The opportunity that caught my eye in this particular downturn is  a 7% yielding FTSE 100 stalwart that could be a good long-term growth pick. It released its full-year results ending December 2019 just yesterday.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…British American Tobacco (LSE:BATS) is the second-largest cigarette maker in the world. Home of brands such as Benson & Hedges, Dunhill, Lucky Strike, Pall Mall, and Rothmans, the London-headquartered manufacturer is a major player in its industry.Smoking rates are declining across the world and governments are making business more challenging for the tobacco industry with increasing regulation. In response, players such as British American and rival Imperial Brands are diversifying. British American possesses market-leading positions in approximately 50 countries, as well as operations in approximately 180 countries. It is also trying to conquer the new vaping market, which has been slightly affected by a health scare in the US.Recent results and strategyBritish American revealed yesterday that its revenue rose nearly 6% to £25.8bn last year. Profit rose almost 8% to £11.1m. Strong cash flow also saw debt reduced by 4%. This is always a positive sign in my eyes. A company’s debt can be off-putting to an investor, but the ability to build a strong cash flow and pay off debt shows good performance and decision-making. There has always been scrutiny towards British American’s debt levels in the past, however these recent results should keep detractors at bay. The firm also announced that a growth strategy is reaping rewards as revenue from “new categories” such as vaping and e-cigarettes increased over 35% compared to last year. Further to this, management maintains confidence in this strategy to continue growing, with an ambitious forecast of £5bn in revenues from before the end of the decade. Over the last few years British American has continued to perform valiantly, enjoying consistent success, which is why I have no doubt it could be a good long-term growth pick.Share prices over the last 12 months have seen an increase of almost 15%. Its dividend per share has been increasing every year over the past five years. Its price-to-earnings ratio, which currently stands at just under 10, could be interpreted as a business currently being undervalued. On the other hand, this current level does represent a certain amount of safety.What I would do nowOn the back of results and general performance over the previous few years, I think British American Tobacco presents opportunity to pick up shares cheaply, compared to previous trading prices. The potential it is showing for me is unrivalled in its industry. Some of the key factors as I have discussed are the strong cash generation, growth strategy, and emerging new products, as well as ability to pay off debt.I believe this stock could be an income champion and a worthy addition to a portfolio.   Image source: Getty Images. center_img I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Jabran Khan | Friday, 28th February, 2020 | More on: BATS Jabran Khan owns no shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Simply click below to discover how you can take advantage of this. Why I think this FTSE 100 champion presents an opportunity See all posts by Jabran Khanlast_img

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