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 0.7%. By the end of trading, Reynolds American rose $0.51 (1.1%) to $47.76 on light volume. Throughout the day, 1,136,198 shares of Reynolds American exchanged hands as compared to its average daily volume of 2,419,100 shares. The stock ranged in a price between $47.25-$47.92 after having opened the day at $47.26 as compared to the previous trading day's close of $47.25.
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Reynolds American Inc., through its subsidiaries, manufactures and sells cigarette and other tobacco products in the United States. The company operates through RJR Tobacco, American Snuff, and Santa Fe segments. Reynolds American has a market cap of $26.1 billion and is part of the consumer goods sector. The company has a P/E ratio of 17.7, equal to the S&P 500 P/E ratio of 17.7. The company has a P/E ratio of 17.7, above the S&P 500 P/E ratio of 17.7. Shares are up 15.1% year to date as of the close of trading on Monday. Currently there is 1 analyst that rates Reynolds American a buy, 1 analyst rates it a sell, and 8 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 compelling growth in net income, notable return on equity, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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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