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first_img Rupert Hargreaves owns shares in British American Tobacco. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Rupert Hargreaves | Sunday, 13th December, 2020 | More on: BATS There’s one company in the FTSE 100 that I believe is so undervalued it could double an investment in the medium term. This company has been relatively unaffected by the pandemic. In fact, it recently increased its revenue expectations for the year. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…However, despite its positive outlook, investor sentiment towards the business has only deteriorated in 2020. This has pushed the stock price down to levels I believe are too good to pass up. Cheap FTSE 100 share on offer The company is British American Tobacco (LSE: BATS). Ethical considerations aside, I believe this is one of the best-run businesses in the FTSE 100. Even though it can’t advertise its primary product of cigarettes, and consumers are abandoning the goods in droves, the group has still managed to increase profits year after year. This is incredibly impressive. Most companies struggle to achieve this kind of performance even without the sorts of restrictions under which British American operates. The company’s performance this year is even more impressive. After initially expecting a high single-digit decline in cigarette sales, the organisation now believes volumes and sales will fall by a low single-digit percentage.Coupled with price increases, management now reckons the group will be able to report a mid-single-digit percentage increase in earnings per share for the year. Despite this growth, the FTSE 100 company continues to look cheap. The stock is trading at a forward price-to-earnings (P/E) multiple of less than 10. That’s significantly below its long-term average, which sits in the mid-teens. At the same time, it looks desirable as an income investment.Income investmentShares in the global tobacco giant currently support a dividend yield of 7.3%, which is more than double the FTSE 100 average. Usually, I’d be wary of such a high dividend yield. It’s typically a sign the payout is unsustainable, and could be cut in the near term. However, on this occasion, I’m confident the distribution is sustainable. Figures show that British American’s annual dividend is covered 1.5 times by earnings per share. What’s more, in recent years, management has aggressively reduced the company’s outstanding borrowings. This has helped strengthen the balance sheet. It also provides additional financial flexibility to maintain the dividend. Considering all of the above, I think it’s likely shares in the company can double investors’ money in the near term. A dividend yield of 7.3% suggests investors would see a 100% return on their money in 10 years, assuming no capital growth. With the shares trading at a discount of around 40% to their long-term average valuation, this seems unlikely. As such, I believe that over the next few years, a combination of income and capital growth will yield high total returns for investors. A total return of more than 100% doesn’t seem unlikely based on the above.  There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it! 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See all posts by Rupert Hargreaves Image source: Getty Images Simply click below to discover how you can take advantage of this. £5k to invest? I think this cheap FTSE 100 share could double my moneylast_img read more

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