Tobacco stocks smoking hot over e-cig sales hope
Imperial Brands had a smoking day yesterday, as the tobacco company was rewarded for its drive into cigarette alternatives.
Broker Liberum named the business, which is currently in a recruiting push for staff to develop its ‘next-generation’ products, as its top pick in the UK tobacco sector. Analysts said product lines were strong, though shares have sunk more than 30pc since August 2016 – which could make Imperial a canny pick for investors.
Some stockpickers caught on quickly to the advice, as Imperial ended the day up 3.2pc, or 84p, at 2705p. Competitor British american Tobacco got bundled up in the tobacco rush, climbing 2.4pc, or 88p, to 3779p.
Brokers also delivered good news for Ocado, which was dubbed the ‘ Microsoft of retail’ yesterday. Shares shot up 5.6pc, or 52.7p, to 1001.5p, as Peel Hunt’s analysts predicted its robotic warehouses could become the ‘standard’ platform for retail logistics in sectors beyond food, ‘just like the Windows operating system’ had for computers. There were some signs of recovery at BT too, prompted by re-ordered priorities at the telecoms giant following its announcement earlier this month that boss Gavin Patterson would leave this year.
Analysts at Jefferies said the change of chief executive, combined with signs of greater investment in fibre and trimmed dividend expectations, made the business a ‘fairer bet’. Shares crept up 2.7pc, or 5.7p, to 214.3p. The optimism helped the
FTSe 100 end the day up 0.31pc, or 23.55 points, at 7627.40, as trade war fears subsided and statistics from the Confederation of British Industry showed manufacturing output picking up. The mood was altogether gloomier at troubled tools rental company HSS Hire, which sank after revealing that it had refinanced its £245m of debt.
But the new debt package from HPS Investment Partners, HSBC and Natwest will in fact cost more than the previous agreement, which caused investors to back away. Shares fell 1.7pc, or 0.6p, to 32.05p.
Elsewhere in the FTSe 250, performance was more positive as the index ended Wednesday up 0.43pc, or 90.6 points, at 20,926.38.
JD Sports leapt 5.4pc, or 21.8p, to 428.1p as analysts at Barclays recommended investors scoop up the shares.
The strong performance at JD, which has just netted US trainer shop The Finish Line, puts it in stark contrast with sports shoe retailer Footasylum which continued to skid yesterday.
More than £4m was wiped off Footasylum’s value on Tuesday, as shares shed 52.8pc. Yesterday they slid another 1.3pc, or 1p, to 79p, meaning the shoe retailer has now been trampled down by 69pc since the beginning of the year.
Investors’ eyes were also glued on Cineworld, which ended the day up 2.8pc, or 7p, to 257p, after paring steeper gains made earlier in the day. Analysts at Stifel were positive about the future of the cinema chain, which announced a controversial takeover of US competitor Regal earlier this year, after they were treated to a tour around its refurbished Leicester Square site on Tuesday night.
In an entirely different niche, fertiliser company Sirius minerals found new growth winning a supply agreement to distribute its polyhalite product – a nutrientrich natural fertiliser – in Nigeria.
The £1.9bn company has yet to convince banks to grant it project finance to help get the mine into action.
With hopes to start producing by 2021, creating up to 1,000 operations jobs and 1,450 supply chain jobs, the Sirius site will be the largest new mining project in the modern era. Its shares closed up 2pc, or 0.64p, at 32.06p.