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

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 lower today making it today's featured Tobacco laggard. The industry as a whole closed the day down 0.8%. By the end of trading, Reynolds American fell 50 cents (-1.2%) to $41.66 on light volume. Throughout the day, 1.7 million shares of Reynolds American exchanged hands as compared to its average daily volume of 2.3 million shares. The stock ranged in price between $41.57-$42.13 after having opened the day at $42.05 as compared to the previous trading day's close of $42.16. Another company within the Tobacco industry that decreased today was Alliance One International ( AOI), down 3.1%.
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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 $23.92 billion and is part of the consumer goods sector. The company has a P/E ratio of 17.1, below the S&P 500 P/E ratio of 17.7. Shares are up 3.3% year to date as of the close of trading on Monday. 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, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

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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