The British American Tobacco (LON: BATS) share price has done well this year, making it one of the best performing companies in the FTSE 100 index. It has jumped by 32% this year while the FTSE 100 index has risen by less than 10%. 

Growth and dividends

BAT’s stock performance has coincided with the ongoing strong performance of other companies in the tobacco industry. 

Altria, one of the biggest tobacco companies, and the manufacturer of Malboro, has risen by over 36% this year. Similarly, Philip Morris International (PM) has soared by almost 40%.

This performance is mostly because investors have reduced their focus on Environment, Societal, and Governance (ESG) issues. As a result, ESG funds have shed billions of dollars in assets in the past few months. 

Tobacco companies were some of the most avoided companies by ESG investors because of their impact on society. Most tobacco companies are accused of causing health issues, mistreating tobacco farmers, and contributing to carbon.

British American Tobacco is also loved by investors who are looking for dividends. In addition to the stock rising by over 32% this year, the company is one of the most generous in terms of dividend payouts. 

BAT has one of the highest dividend yields in London. It pays about 9.50%, meaning that a £10,000 investment will bring in £950 in dividend payouts. Combined with dividends, BAT’s total return has risen to over 40% this year, outperforming the S&P 500, which has returned 18%.

New categories doing well

BAT’s performance is notable because of the challenges the company has gone through in the past few years. 

These woes came to light in December last year when the company caught the market by surprise after deciding to write down $31.5 billion of its US business. It attributed this write down to the slowing economy, the ongoing shift towards vaping, and the rising competition in the country. 

$31.5 billion is a lot of money for a company whose market cap stands at about $85 billion after its stock surge this year. 

The stock has done well even after the company’s financial results came out short than expected. 

Its first half financial results showed that the company’s revenue dropped by 8.2% to £12.34 billion. This revenue dropped even after the number of consumers of its smokeless products jumped to over 26.4 million.

BAT’s revenue from new categories, which includes vapes, also dropped by 0.4% to £1.65 billion while its profits from operations dived by 28.3% to £4.2 billion. 

Its performance is a reflection that the tobacco industry is still seeing slow growth globally. A key factor is that the number of smokers is not growing. The situation is even worse among the younger generation.

A good example of this is that BAT’s revenue slowdown was mostly because of its US business whose combustibles revenue dropped by 8.5%. The rest of world revenue rose by just 2.2% during the first half of the year.

Another example is that the revenue slowdown is spread across other companies in the tobacco industry. Altria’s revenue dropped to $5.2 billion in the last quarter from $5.4 billion in the same period in 2023.

The only company that had growth in the quarter was Philip Morris whose revenue rose from $8.9 billion to $9.46 billion. 

On the positive side, British American Tobacco’s new categories business is now accounting for a big share of its total revenue, which is its goal. It now accounts for about 18% of the total revenue and the management expects the figure to continue rising. 

Good valuation but risks remain

BAT has attractive valuation metrics. It trades at a forward non-GAAP PE ratio of 8.30, lower than the industry average of 18. It also has a forward GAAP PE multiple of 10, lower than the industry’s average of 20.

Tobacco companies always attract lower valuation multiples compared to other firms because of their slow growth and the fact that the sector is seen as toxic.

There are two main risks for BAT. First, it is unclear whether the company’s growth in the new categories will be long-lasting. Second, over time, it will see weaker cigarette growth since many young people are not interested in smoking.

British American Tobacco stock analysis

Turning to the weekly chart, we see that the BAT stock price has been in a strong bull run this year. It has jumped from a low of 2,076p in January to a high of almost 3,000p.

The stock formed a golden cross pattern as the 200-day and 50-day moving averages have made a bullish crossover. In most periods, this is one of the most popular bullish signs.

The stock has also formed a cup and handle pattern, a popular bullish sign. Therefore, the stock will likely continue rising as bulls target the upper side of the cup at 3,023p. It will then consolidate to form the handle section and then resume the uptrend.

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Asian markets opened with varied performances on Monday, reflecting investor reactions to recent economic data and weather-related disruptions.

Hong Kong’s Hang Seng Index fell by 0.76% as investors digested weak economic indicators from China. Meanwhile, Australia’s S&P/ASX 200 and Taiwan’s Weighted Index posted modest gains.

Hong Kong’s Hang Seng index drops

The decline in Hong Kong’s Hang Seng Index was driven by disappointing economic figures from China released over the weekend.

August data revealed that factory output, retail sales, and investment numbers all fell short of expectations. Additionally, the urban jobless rate reached a six-month high, and year-on-year home prices dropped at their fastest pace in nine years.

These figures raised concerns about the health of China’s economy and contributed to the negative sentiment in Hong Kong’s stock market.

Australia’s S&P/ASX 200 rises 0.44%

In contrast to Hong Kong, Australia’s S&P/ASX 200 opened up 0.44%, signaling some positive momentum. The index’s increase may reflect a degree of investor optimism despite regional uncertainties.

Additionally, the Taiwan Weighted Index showed a slight uptick, suggesting cautious optimism among investors in the region.

Japanese yen strengthens

Japan’s markets remained closed for Respect for the Aged Day, but the Japanese yen strengthened to 140.49 against the US dollar.

This represents the yen’s strongest level in over a year. Expectations for Japan’s inflation data, set to be released soon, are that it will show a slight increase in August.

This may influence the Bank of Japan’s upcoming policy decisions. The central bank is anticipated to keep interest rates unchanged while signaling potential future rate hikes.

Typhoon Bebinca causes flight cancellations in China

Typhoon Bebinca has disrupted travel in China, leading to the cancellation of hundreds of flights. Shanghai, in particular, is expected to experience the strongest storm since 1949.

The typhoon’s impact on economic activities and investor sentiment is an additional factor influencing market conditions across the region.

Read More: China’s housing market: Is the bottom in sight?

Market closures and upcoming central bank decisions

Markets in mainland China and South Korea were closed for the Mid-Autumn Festival, while Japan’s Respect for the Aged Day holiday also contributed to reduced trading activity.

Investors are awaiting key central bank decisions from the region, including China’s setting of its one- and five-year loan prime rates on Friday.

The current one-year loan prime rate stands at 3.35%, and the five-year rate at 3.85%. These rates are crucial as they impact loan and mortgage pricing.

US indexes end the week on a high note

In the US, after a challenging start to September, major indexes ended the previous week on a positive note. The S&P 500 gained 0.54%, closing at 5,626.02, while the Nasdaq Composite rose 0.65% to 17,683.98.

The Dow Jones Industrial Average increased by 0.72%, ending the week at 41,393.78. This marked the best week of 2024 for the S&P 500 and Nasdaq Composite, signaling a rebound amid broader market volatility.

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AMC Entertainment (AMC) stock price has moved sideways in the past few months as concerns about its upcoming maturities and the trends in the box office continues. It has been stuck at $5 since May, where it has been in the past few months. It remains about 109% from its lowest point this year.

AMC is lagging behind Cinemark

AMC stock price has dropped by over 58% from its highest point this year. The initial jump happened in May as meme stocks jumped following Roaring Kitty’s return to social media platforms like X. 

The stock has moved sideways on the past few months as investors focused on the company’s financial results and its huge debt load. Its performance has lagged the performance of Cinemark, the other big movie theatre company.

Cinemark’s stock has surged to $29, up by over 117% from its lowest point this year, making it one of the best-performing companies in the industry. It has also jumped to its highest point since February 2020, meaning that it has recovered all the losses it made during the Covid-19 pandemic. It has also become a bigger company than AMC with its market cap of over $3 billion.

A key concern among AMC investors is its ongoing dilution, which is higher than what Cinemark has done. Data shows that Cinemark’s total outstanding shares have jumped from over 117 million in 2020 to 122.3 million today.

On the other hand, AMC has been one of the most dilutive companies in Wall Street as the number of outstanding shares have jumped from over 5.96 million in 2020 to 361 million. This means that shares have jumped by over 5,000% in the last few years.

AMC continued to dilute its shareholders this year. The company raised over $124 million through equity offerings as its stock surged, and analysts expect this trend to continue in the coming years.

The most recent 10Q statement shows that the company has substantial operating lease payments coming up in the coming years. It has over $894 million in 2025, $831 million in 2026, $766 million in 2027, and $680 million in the following year. Altogether, the company has over $4.25 billion in lease liabilities. 

The most important liability is the cash that matures in 2026 when the company’s $2.6 billion cash matures. However, on the positive side, the company has negotiated its financing to postpone these payments to 2029 and 2030. 

This is a big decision since the company now has more leg room to handle its finances in the next few years. 

Box Office is recovering modestly

AMC Entertainment’s stock has reacted to the ongoing trends in the box office industry. Recent data shows that Inside Out made over $652 million in domestic sales followed by Deadpool & Wolverine, which made $621 million.

Despicable Me 4 made $360 million while Dune, Twisters, Godzilla x Kong, and Kung Fu Panda made over $193 million. These numbers mean that the industry is making a steady recovery and that people are still interested in going out for movies.

The most recent results showed that AMC’s revenue dropped from $1.03 billion in the second quarter, down from $1.3 billion in the same period in 2023. For the first half, its revenue dropped to $1.9 billion. This revenue drop happened across its top divisions like admissions and food and beverage. 

AMC also moved back to a big loss. It made a net loss to $32.8 million from the previous profit of over $8.6 million. 

Analysts expect that AMC Entertainment’s revenue will come in at $1.28 billion, down from the $1.29 billion it made in the same period in 2023. Additionally, analysts expect that its loss per share will be 13 cents, a reversal from the 0.08 profit it made last year. For the year, revenue is expected to come in at $4.58 billion followed by $5.17 billion next year.

AMC stock price forecast

The daily chart shows that the AMC Entertainment stock price has moved sideways in the past few months. As a result, the stock has been consolidating at the 50-day and 25-day Exponential Moving Averages (EMA).

The Average True Range (ATR) has continued falling, a sign that the volatility has dropped. Also, the accumulation and distribution indicator has continued moving downwards. 

Most importantly, the stock has formed a symmetrical triangle chart pattern, which is nearing the confluence level. This triangle is nearing the confluence level, meaning that a big move is expected to come up soon.

It is still unclear whether this will be a big upward or downturn move. At this stage, the next support and resistance levels to watch will be at $4 and $6. A cross above the triangle pattern will point to more gains.

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Advanced Micro Devices (AMD) stock price has remained in a deep bear market this year as concerns about the artificial intelligence (AI) industry continued. It has dropped by over 35% from its highest point this year, giving it a market cap of over $246 billion. 

AI growth concerns remain

In theory, the artificial intelligence industry is doing modestly well. Just recently, there are reports that OpenAI, the developer of ChatGPT, is about to raise funds at a $150 billion valuation. Just recently, we reported that the firm’s fundraising from Apple and Nvidia were funding it at a $100 billion.

Nvidia, the posterchild of the AI industry is also doing well, as evidenced by its secons-quarter financial results. Its revenue jumped to over $30 billion in the second quarter, up by over 115% from the same period in 2023. Its quarterly results were higher than what the company made in 2022. 

This growth happened as companies and governments continued to accumulate its GPUs as AI investments jumped. It is estimated that large tech companies and governments will spend over $1 trillion in AI investments in the next few years.

The challenge, however, is that there are signs that AI investment is getting out of hand with no immediate benefit. In a recent research paper, analysts at Goldman Sachs warned that transformation changes will not happen quickly, and that AI would take over a decade to go mainstream.

Most importantly, the analysts warned that to generate an adequate return on the $1 trillion, the AI industry will need to solve complex problems. 

AMD is seen as an Nvidia alternative

AMD, which is run by Lisa Su, who is Nvidia’s CEO’s cousin, is often seen as Nvidia’s alternative, especially now that Intel is not doing well. 

AMD, which is a big player in the CPU industry, recently launched the Mi300 Series, which is seen as a good and cheaper alternative to Nvidia’s HP-100. The only challenge is that Nvidia owns the CUDA software that lets developers convert the GPUs for general-purpose computing tasks.

Analysts expect that AMD will ultimately catch up and start to gain market share in the GPU and AI industries. Recent data shows that the company is achieved about 10% share in the industry as it generated $1 billion in revenue. AMD also raised its guidance to over $4.5 billion even as concerns about Microsoft slashing spending continuing.

AMD’s data center revenue could do well as more companies opt for its GPUs, which are seen as being lower priced. 

Growth and valuation concerns

AMD needs to take market share in the data center GPU industry because of the ongoing slow growth in the PC industry, as I noted on my HP article. The results revealed that AMD’s total sales rose by just 9% to over $5.8 billion.

AMD also has weaker metrics than Nvidia, which could improve if the company starts to grow its market share in the GPU industry. For example, while Nvidia has gross margins of 76%, AMD’s stands at 46%. Nvidia’s net profit margin stands at 55% while AMD has a margin of 8%.

AMD’s total data center revenue rose by 115% to $2.8 billion, helped by record GPU shipments and CPU sales. 

The company’s other segments like gaming and embedded are not doing well. Gaming revenue crashed by 59% to $648 million while its embedded one fell by 41% to $861 million. 

AMD’s growth is expected to start picking up as GPU growth continues. Analysts expect that its revenues for the third quarter will come in at $6.7 billion, a 15.70% increase from what it made in the same quarter in 2023. 

For the year, AMD’s revenue is expected to rise by 12.90% to $25.6 billion. It will then grow by over 28% to over $32.9 billion. 

A key concern is that AMD is significantly overvalued considering that its growth is relatively slow. AMD trades at a forward P/E ratio of 45 and a trailing multiple of 54, higher than the sector median of about 23. Its valuation multiples are also higher than those of Nvidia, a company that is doing much better.

AMD stock price analysis

The daily chart shows that the AMD share price peaked at $226.90 in March and then suffered a harsh reversal to a low of $122.26 on August 5. 

It has moved between the 38.2% and 50% Fibonacci Retracement level. Also, the stock is consolidating at the 50-day and 200-day Exponential Moving Averages (EMA) while the MACD indicator has moved above the neutral point.

Therefore, the stock’s outlook is neutral with a bullish bias. If this happens, the stock will likely bounce back and reach a high of $187, it highest point in July. The alternative scenario is where the stock drops to the next support at $122.26, its lowest swing in August.

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Nio (NIO) stock price has staged a strong comeback this month even as other Chinese electric vehicle companies like Li Auto, Xpeng, and Polestar remains under pressure. It jumped to a high of $5.5 on Monday, its highest point since May 15. It has soared by over 53% from its lowest point this year, making it one of the best-performing EV companies.

Nio financial results

Nio, a leading Chinese electric vehicle company, published strong financial results, which showed that its business was doing well. Its vehicle deliveries jumped to over 57,000 in the second quarter, a big increase from the 23,520 it sold in the same period in 2023.

The deliveries were almost double what it delivered in the first quarter, and is a sign that the EV industry is doing well. This is unlike what most analysts have been predicting.

Nio’s vehicle sales rose by 118% to over $2.1 billion and a 87% jump from the last quarter. Most importantly, unlike the recent expectations, Nio continued to grow its vehicle margins, which rose to 12.2% from 6.2% in Q2’23 and 9.2% in the first quarter. 

As a result, Nio’s gross pofit rose to $232 million while its net loss slowed to $716 million. Excluding share-based compensation, Nio’s loss came in at $624 million. 

Most importantly, Nio hopes to continue growing, especially with the upcoming launch of its ONVO brand. ONVO’s L60 is a relatively low-cost brand that has already attracted thousands of pre-orders. 

Nio hopes to deliver between 61,000 and 63,000 in the third quarter, a 10% to 13% increase from the same period in 2023. It also expects that its revenue will be between $2.6 billion and $2.7 billion.

Cheap valuation as profitability nears

One reason why Nio stock price has crashed hard in the past few years is that it has been a big incinerator that has made substantial losses. Its net loss has increased to over $9.2 billion in the last five financial years. These losses happened even as Nio’s revenue totalled over $24.2 billion in the same period.

Nio’s loss-making has been because of its big investments to increase manufacturing capacity. It has also spent a fortune in research and development (R&D) and selling, general, and administration. 

Nio is not the only EV company that has come under pressure in the past few years. Rivian, the giant American company known for its SUVs and pickup trucks, has lost billions of dollars and was recently saved by Volkswagen, which invested $5 billion.

Similarly, Lucid Group has also become a big cash incinerator. Like Rivian, it also remains in business because of the large investments by the Saudi Arabia’s government. 

Tesla, the gold-standard in the EV industry, also recorded substantial losses before it turned a profit. It is estimated that it lost over $6 billion between 2003 and 2020. 

Fortunately, there are signs that Nio is working towards profitability in the next few years. Nio’s loss per share stood at $1.53 in 2023 and analysts expect it to narrow its loss to $1.23 this year and $0.92 in the following year. 

On the positive side, Nio has the balance sheet it needs to become a highly profitable brand. It ended the last quarter with over $5.7 billion in cash and short-term investments. Its short-term borrowings stands at $729 million, which it can pay comfortably without dilutions.

Risks remain

Still, Nio, like other companies in the EV industry, is facing substantial risks ahead. The first risk is that the EV industry is slowing globally, especially in China, its primary market. It is also getting highly competitive, with companies like Xpeng and BYD vying to take market share. 

Second, there are signs that consumer spending is slowing in China. This explains why many companies like LVMH, Estee Lauder, and Burberry that do a lot of business there are struggling.

Third, Nio’s global expansion approach is finding some major challenges. Like most EV companies, Europe, an economy that is slowing is a big priority. The challenge is that many Europeans are now focusing on hybrid vehicles. 

Nio stock price analysis

NIO chart by TradingView

Nio’s stock surge is in line with my last prediction, when I forecasted that its comeback would be epic. It formed a double-bottom chart pattern at $3.65 and is now approaching the neckline at $6. 

The stock is also nearing the 38.2% Fibonacci Retracement point. It has also found a strong resistance point at the 200-day moving average. Also, the Relative Strength Index (RSI) has jumped to the overbought level. It has formed a small bullish flag chart pattern.

Therefore, the path of the least resistance for the Nio share price is bullish, with the next point to watch being at $6. A break above that level will point to more gains.

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