Reynolds American Inc (RAI): Today's Featured Tobacco Winner

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Reynolds American ( RAI) pushed the Tobacco industry higher today making it today's featured tobacco winner. The industry as a whole closed the day up 3.3%. By the end of trading, Reynolds American rose 94 cents (2.4%) to $40.92 on average volume. Throughout the day, 3.3 million shares of Reynolds American exchanged hands as compared to its average daily volume of 2.5 million shares. The stock ranged in a price between $40-$41.05 after having opened the day at $40 as compared to the previous trading day's close of $39.98. Other companies within the Tobacco industry that increased today were: Star Scientific ( STSI), up 9.3%, Vector Group ( VGR), up 5.2%, and Universal Corporation ( UVV), up 4.6%.
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Reynolds American Inc., through its subsidiaries, manufactures and sells cigarette and other tobacco products in the United States. Reynolds American has a market cap of $22.4 billion and is part of the consumer goods sector. The company has a P/E ratio of 16, below the S&P 500 P/E ratio of 17.7. Shares are down 3.3% year to date as of the close of trading on Thursday. Currently there is one analyst that rates Reynolds American a buy, one analyst rates it a sell, and nine rate it a hold.

TheStreet Ratings rates Reynolds American as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, increase in net income, notable return on equity and reasonable valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the tobacco industry could consider PowerShares Dynamic Food & Beverage ( PBJ) while those bearish on the tobacco industry could consider PowerShares DB Agriculture Sht ETN ( ADZ).

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