If you do not mind the product itself, cigarettes, Reynolds is a cash flow generating company. Thier price is a little bit high at this moment but any moves lower in the equity markets and you would want this stock in your portfolio as they consistently bring in revenue and earnings.
Reynolds American Inc. is the old R.J. Reynolds tobacco company. This company is interesting in many ways. To begin with you have to first get over any person obstacles of the company being a tobacco company and look at it from the perspective of being a business. The company’s earnings have been steady but should be moving higher. Here, we can see the past few year’s worth of revenue, income and earnings-per-share laid out:
2011: $8,541.0 $2,447.0 $2.41
2012: $8,304.0 $2,492.0 $2.25
2013: $8,236.0 $3,103.0 $3.15
2014: $8,471.0 $2,654.0 $2.76
2015: $10,675.0 $7,076.0 $2.57
Given this earnings listing and where I like to look for potential investments, the stock is trading at $50 per share. That is nearly 20-times earnings. But, this is a company that I have my eye on for a few reasons and I will explain.
First, I am a firm believer that the equity market is going to come down to a more realistic earnings per share ratio. That will allow for a better entry opportunity. The current overall price-to-earnings ratio is too rich historically; the ratio is trading at 26 whereas normally it is 15. So, a stock that is trading at a 20-times earnings should come down proportionally and offer an opportunity around the 12-times earnings. This kind of company is something that tI like with regards to a long-term holding. This company is predictable and consistent.
This is the kind of company that you are looking for when it comes to creating long term wealth and income. It is because of their predictability that this company is so attractive to me with regards to putting it in my own portfolio. But, I will only do so at a price that makes sense, and just about no prices make sense right now. The price-to-earnings ratio is too rich to be sensible; 26 is far too high.
I have been diligently putting together a list of stocks that I will be adding in to my own portfolio when the market comes back down to better prices, once the euphoria of the Republican election wears off. I am looking to add this company into my portfolio because it can profile an earnings and dividend that will make for a long-term retirement holding.
One of the things that does stand out to me from the list above is the revenue from 2014 - 2015. That is a huge jump. There was another huge leap in the operating profits. However, there was a slight drop in earnings-per-share. This is more of a one-off than anything and it is my belief that the company’s numbers will realign themselves with what they have been doing over the past few years. In the meantime, the moves have allowed for the company’s stock to position itself to head much higher should the revenue continue to increase as it has. Given the bigger revenue jumps the company will be well positioned to increase its earnings potential on a per-share basis. This will push the company’s stock up significantly.
Certainly there are some out there that will not want to get involved in a company that deals with the products that Reynolds does. Others will be able to see this company as it is, yet another business that trades on the stock exchanges. There is really, long-term opportunity here. I am considering this stock for my own portfolio. I will be doing so when the stock move down in price, but keeps its earnings continually moving higher. The overall equity market is too high, it will be coming down. That would be a good time to pick up more of this stock.
|This article from Macroaxis published on 17 of January contributed to the next trading period price escalation.The trading delta at closing time to the next next day price was 0.55% . The trading delta at closing time when the story was published to current price is 15.97% .|