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 was unchanged today. By the end of trading, Reynolds American rose 44 cents (1.1%) to $42.38 on average volume. Throughout the day, 2.2 million shares of Reynolds American exchanged hands as compared to its average daily volume of 2.2 million shares. The stock ranged in a price between $42.25-$42.97 after having opened the day at $42.46 as compared to the previous trading day's close of $41.94. Another company within the Tobacco industry that increased today was Universal Corporation ( UVV), up 2.5%.
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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 $23.97 billion and is part of the consumer goods sector. The company has a P/E ratio of 17.2, below the S&P 500 P/E ratio of 17.7. Shares are up 3.5% year to date as of the close of trading on Tuesday. Currently there are no analysts that rate Reynolds American a buy, one analyst rates it a sell, and eight 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 growth in earnings per share, increase in net income, notable return on equity, reasonable valuation levels and good cash flow from operations. 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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