BROKERS’ NOTES: Buy Hermès, sell tobacco

David Shapiro, chief global equity strategist: Sasfin Wealth

Buy: Hermès 

I think the makers of the Birkin bag are proving to be the leading luxury play. Owning a Hermès product is the ultimate symbol if you’re aspirational and seeking social status. It beats LVMH by a long shot. Recent results revealed good performances across all regions, beating forecasts. Total revenue for 2023 hit €13.4bn, up 21%, with annual recurring operating profitability reaching its highest level ever at 42.1% of sales. The numbers show you how many really, really rich people there are in the world.

Sell: Tobacco

Last time I chose a booze company as my sell pick. I’m still negative on tobacco. I know companies such as British American Tobacco are shifting to noncombustibles and other alternative products but, regardless, the health authorities continue to seek ways to restrict sales across their entire range. If you’re a smoker or a vaper, you’re banished to a corner in basement 8. You’re an outcast. You’re not cool. That’s hardly the foundation on which to build growth. I know these companies generate big cash and pay attractive dividends, but so what?