We came across a bullish thesis on British American Tobacco p.l.c. (BTI) on Substack by Brian Coughlin. In this article, we will summarize the bulls’ thesis on BTI. British American Tobacco p.l.c. (BTI)'s share was trading at $41.83 as of April 16^th. BTI’s trailing and forward P/E were 23.25 and 8.84 respectively according to Yahoo Finance.

British American Tobacco (BTI) is emerging as a stealth frontrunner in one of the most disruptive trends reshaping the tobacco industry: the rapid rise of nicotine pouches. Once a niche Swedish product, nicotine pouches have exploded into the mainstream as smoke-free, odor-free, spit-free alternatives to cigarettes, driven by shifting consumer preferences and a growing global focus on harm reduction. With a projected compound annual growth rate (CAGR) of 34.4% between 2025 and 2030, the global nicotine pouch market represents a multi-billion-dollar opportunity that’s still in the early innings. BTI’s flagship pouch brand, Velo, has been gaining momentum, especially with the introduction of Velo Plus, a new product line offering larger, softer pouches, higher nicotine strengths, and lower price points. Velo’s performance has been remarkable—its 4-week rolling volume share in the U.S. reached 7.9% in March 2025, reflecting 185% year-over-year growth, while Velo Plus alone captured a 5.4% share just 12 weeks after launch and now comprises approximately 70% of all Velo sales.

What’s driving this surge? Velo Plus delivers a better overall user experience compared to incumbent leader Zyn, with a more satisfying mouth feel, superior nicotine release, and compelling value—$2.99 for 20 pouches versus Zyn’s $5.59 for 15. These attributes resonate with cost-conscious consumers seeking a discreet and customizable nicotine experience, which has become increasingly desirable amid rising wellness trends. While Zyn remains dominant with a 50%+ share, particularly in flavor-restricted markets like Massachusetts, BTI’s rapid innovation and competitive pricing put it in a strong position to chip away at that lead. Importantly, BTI’s investment appeal goes beyond product growth. The stock trades at just 9x forward earnings and offers a well-covered 7% dividend yield, presenting a stark valuation contrast to Philip Morris, which trades at nearly 22x earnings. If Velo’s growth continues, BTI could experience a meaningful rerating.

Risks remain, including regulatory scrutiny over flavored nicotine products and ongoing public health debates, but the long-term thesis is clear: consumer nicotine preferences are shifting toward cleaner, safer, and more convenient alternatives, and BTI is well-positioned to capitalize. With strong market share gains, a growing moat in next-gen nicotine, and one of the most attractive valuations in the sector, BTI offers a compelling risk/reward profile. Investors willing to look past short-term headwinds may find themselves early in a major transformation—and in a position to reap the rewards.

British American Tobacco p.l.c. (BTI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held BTI at the end of the fourth quarter which was 24 in the previous quarter. While we acknowledge the risk and potential of BTI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BTI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.