Shares digital

British American Tobacco (BATS) £18.73

In volatile markets tobacco stocks are deemed to be defensive plays but regardless of that, British American Tobacco’s chart presents some interesting features, according to Christian Blaabjerg, market strategist at Saxo Bank. He points out the stock has been falling and touching the 200-days moving average has been rejected. It is now moving up and is riding on a strong trend. In terms of newsflow, positive news for the company came from Turkey last week. It said that it had won an auction for the cigarette business assets Turkish state-owned tobacco company Tekel. The $1.72 billion bid for the company brings British American’s share of the Turkish market to 36% and the company forecasts a $151 million addition to 2007 EBITDA thanks to the acquisition. Stable earnings and an attractive technical picture make it an interesting play, so we suggest buying with a tight stop loss at £17.78, targeting a move to £20.

ACTION: BUY British American Tobacco • Target £20 • Stop Loss £17.78

TIME TARGET: 4 WEEKS