eyeQ: this tobacco stock could damage your wealth
interactive investor has teamed up with the experts at eyeQ who use artificial intelligence and their own smart machine to generate actionable trading signals. Here’s what it says about this FTSE 100 income play.
1st February 2024 10:49
by Huw Roberts from eyeQ
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"Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance." eyeQ
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
Imperial Brands
- Trading signal: strategic long-term
- Model value: 1,834.2p
- Fair Value Gap (premium/discount to Model Value): +6.1%
- Model relevance: 79%
Data correct as at 26 January 2024. Please click glossary for explanation of terms.
Given the state of the UK economy, Imperial Brands (LSE:IMB) screens as rich (current share price above our Model Value) on the eyeQ smart machine.
UK tobacco company Imperial Brands (think John Player, Lambert & Butler cigarettes) is up over 7% so far in 2024. For context, the FTSE 100 is down 1.3% in the first few weeks of the new year.
An impressive performance, but there's a potential red flag.
eyeQ identifies IMB as rich in current macro conditions, indicating the rally lacks broader economic justification. It now sits 6.1% above model fair value - where the stock "should" trade given UK growth, inflation, what the Bank of England is doing with interest rates, how strong the pound is and more.
That’s near the upper end of recent valuations.
At a minimum, these are not great levels to be buying Imperial Brands. And, for the more active investors, if you have IMB in your portfolio, these are attractive levels to maybe book a little profit and seek alternative investment ideas.
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Disclosure
We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.
Please note that our article on this investment should not be considered to be a regular publication.
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