Investing in tobacco can be harmful to your portfolio’s health

Nick Raynor, investment adviser at The Share Centre, explains why Imperial Tobacco is a ‘sell' for investors, despite being on track to meet 2010 targets.

"Imperial Tobacco has seen volumes in fine cut tobacco increase 6% for the final six months of 2010 and so is on track to meet forecasts for the year.  However, the good news ends there.  Revenue has slowed in line with the sector over the last six months and we are now seeing weaker volume levels in Spain, USA, Russia and the Ukraine.

"We continue to list Imperial Tobacco as a ‘sell' for investors as we favour British American Tobacco (BAT) from the sector.  BAT offers better opportunities for growth and is also paying a higher dividend.

"Defensive investors will appreciate the stability of BAT, but we currently list it as a ‘hold' as better returns could be found outside the sector.  Investors should remember - investing in tobacco companies could be as harmful to your portfolio as smoking their products is to your health."