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MARKET COMMENT
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Investing is easy with hindsight. Back in the Spring of 2000 you could have picked shares in Imperial Tobacco (LSE: IMT) for not much more than £3. At that time tobacco shares were depressed by fears of litigation and everyone was far more interested in the latest white hot tech share. As 2002 draws to a close, things are rather different. An investment in Imperial would have trebled your money: proving, once again, that going against the crowd can be a great way to invest so long as you have the stomach to last the distance. Other tobacco companies such as Gallaher (LSE: GLH) and British American Tobacco (LSE: BATS) would have done you just as proud. The fear of litigation has receded and acquisitions like the £3.5b purchase of Reemtsma have helped Imperial increase its earnings significantly. Imperial delivered another strong set of results this morning with earnings per share of 68.4p being double their level of five years ago. Acquisitions have increased net debt to £3.7b, but the nature of the tobacco business, with steady demand and little in the way of capital expenditure to consume cash, makes this look manageable. The full-year dividend was increased to 33p, to give the shares a yield of 3.4%. Further earnings growth is expected for the next financial year with cost cuts and the inclusion of Reemtsma's results for a full twelve months. Analysts are looking at earnings per share to come in at around the 85p mark. This would value Imperial at just over 11 times earnings. So, despite their excellent performance, the shares may still offer a little value for the unethical investor. > The eerily quiet Imperial Tobacco discussion board | Tobacco looks good for 2002