Thursday tips round-up: British American Tobacco, Rightmove

1st Aug 2013 06:43

British American Tobacco (BAT), like the rest of the industry, is facing future headwinds, The Telegraph's Questor column said. The global trade in illicit cigarettes always increases in a downturn and it is now growing at about 1.0 per cent each year but it is falling in places such as Canada, Mexico and Pakistan. The move to plain packaging is also a potential problem for the sector. However, Australia is the only country to bring in the plain packaging law and BAT's Chief Executive Officer Nicandro Durante said on Wednesday that so far the change has had no effect on sales. The electronic cigarette market, although small, is expected to show strong future growth, and this week BAT launched its first of the product in Britain, called Vype. "Trading on a 2013 earnings multiple of 15.6 falling to 14.4, the rating remains 'hold'," Questor added.Property website Rightmove has a market share in excess of 80%, a capitalisation of almost £2.5bn and its shares sell on an earnings multiple of more than 30 - so one is entitled to ask what can go wrong, The Times' Tempus column muses. In its interim figures on Wednesday the company provided a list of risk factors - the state of the housing market, competition and the need to keep growing advertising revenue per customer. Regulation, and any move by the competition authorities to curb that dominant market position could also pose a risk. The interim figures showed traffic rose by 22%, the number of advertisers was up by 3.5% and underlying operating profits were up 15% to £49m. The shares added another 121p to £24.31. "One day the music will stop. But it is not easy to say why or when," Tempus said. It is surprising shares of Office Depot have fallen nearly a tenth since announcing in February it was buying Office Max, the Financial Times' Lex column believes. The merger should be considered a good match as the two office supply chains will combine to take out millions of costs and emerge a stronger company. However the success of any deal depends on management integrating buyer and seller and investors seem to doubt this will happen. The problem is they are yet to find a Chief Executive for the merged company, as they consider insiders and outsiders for the role. OfficeMax's largest shareholder Starboard Value thinks the board is weak and wants to remove four of the eight members and install its own slate to oversee the integration. Two hurdles remain for the companies - antitrust approval and when management gets its act together. Lex thinks the deal makes too much sense to bungle.RDPlease note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.