Research Report ►(comments)

Commodity prices change when there are unexpected changes to supply and demand of the target commodity. WikiWealth tries to predict these unexpected changes by examining the companies, which supply and demand the commodity (See Fundamental Commodity Analysis). When demand potential is greater then supply potential, then prices will increase; the opposite is also true. WikiWealth's Main Street Analysis captures - along with user help - the impact of supply and demand changes by analyzing the commodity's importance. In general, the more important the commodity, the faster the price will increase when commodity demand increases. A "Buy" rating from both approaches mean the commodity has high potential to increase in value.

Tobacco Summary

Tobacco Commodity Analysis ► (edit / improve) Tobacco is a farmed product derived from the leaves of the nicotiana plant. Common products include smoked, chewed, snuff, and dipped tobacco. Commodity Analysis: Tobacco is rated a Buy. Tobacco demanders have a high potential to increase in value, while there was not enough evidence to correctly predict tobacco suppliers potential. Investor Survey: Tobacco’s long term growth potential is moderately favorable due to high scores on sensitivity to price changes. SWOT Analysis: Strength: Tobacco has many addictive properties; Weakness: tobacco produces considerable health risk to users. Opportunity to grow: there are signs that tobacco has medical applications; Threats to growth: tax increases on tobacco could hurt profits. Trading Strategy: The commodity analysis buy rating indicates that tobacco should increase in price over the short term, whereas a moderately favorable investor survey means tobacco may increase in price over the long term.

Investment Impacts (help)

Greece Country Analysis ► (edit / improve) Greece (EUR) has large agriculture, tourism and service sectors. Currency: Greece is part of the Euro economic zone, whose currency has the potential to decrease in value on a global scale per the purchase price parity. However, Greece has positive investment flow potential. Investor Survey: Greece’s economic environment is favorable for long term economic growth due to many SWOT strengths and opportunities. Trade: Finland, the UK, Germany, the USA, and Italy are the top export partners, while the service industry is a fast growth sector of the economy. Commodity: Greece’s industrial sector transports large amounts of fuel around the world. SWOT Analysis: The leading Greek strength is their growing tourism industry, while no major weaknesses were discovered. IT development has the opportunity to propel growth, while no major threats were discovered. Trading Strategy: A moderately-valued currency, high investment flow potential and average business environment lead to a slightly positive outlook for Greek investments.

- per capital.

Materials Industry Analysis ► (edit / improve)

Description: The materials industry includes companies whose sales originate from the mining, acquisition and sale of physical substances for manufacturing-related purposes. Read More.

Profit Analysis: The best way to profit from material stock is to find the most undervalued investments (Wall Street and Main Street buy ratings) during economic recessions. Those investments should be undervalued (see Wall Street on left side), and have high Main Street Common Sense investment ratings (see Main Street on right side). When an economic recovery occurs, material stocks tend to outperform the general stock market, because consumers and businesses must increase their inventories quickly to meet demand for manufactured goods. Consumers and business delayed purchases on items they wanted, but resisted buying during tougher economic times. Eventually, material company investments become overvalued, because profits and stock prices increase past their fair values. During the last stages of an economic business cycle, just before a recession, it is best to sell material stocks, because they are likely to decrease in price the fastest. Expensive (overvalued) stocks with low Main Street Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are the best and two sell ratings are the worst possible stock investments.

Inflation Hedge: Changes in commodity prices affect material stocks. When commodity prices are high due to increased demand or lower supply, material stocks increase, because demand for their goods also increases. Inflation occurs when the price of goods and services increases. The price of materials are generally the first inputs into the production of goods, so changes in material prices directly affect the cost of products, which is measured by inflation. Therefore, a good hedge against inflation is to own material stock investments. When inflation increases, so do the profits of material companies, which may have directly contributed to the increase in prices.

Trading Strategy: During economic recessions, consumers tend to cut back on spending to save money. Businesses tend to cut back on investments. Industrial companies make the products bought by consumers and businesses, but to make those products, industrial companies must obtain materials. Less spending on goods decreases material business revenue and eventually decreases stock prices. During economic recoveries, consumers and businesses spend quickly to replace or catch up with quickly increasing demand. Material companies quickly receive orders from industrial companies who need to manufacture new products to meet quickly increasing demand. Higher spending increases material business revenue and eventually increases stock prices. During a longer economic expansion, consumer and business demand increases for material companies, but at a slower pace than during the recovery stage.

¹ WikiWealth only uses the largest 30 companies in each industry for the basis of these financial measures. Each statistic is the market weighted average of the 30 companies.

² Investment potential (margin of safety) is a weighted average of the discounted cash flow (DCF), the enterprise value (EV) market multiple, and the Warren Buffett investment methods.

Major Tobacco Producers ► Press "Edit / Improve"

USA Country Analysis ► (edit / improve) The United States (US) has a highly productive, capitalist economy and is the largest and most diverse market in the world. Currency: the US dollar (USD) has the potential to increase in value especially versus the Australian and Canadian dollar because of the significant potential of undervalued companies. Investor Survey: the economic environment is very favorable for long term economic growth due to high scores on economic freedom and economic diversity. Trade: China, Japan, Mexico, and Canada are the top US trading partners, while the leading export and import are electrical machinery and vehicles, respectively. Commodity: The US produces a significant amount of coal and wheat for use at home and as an export. However, the US consumes a larger amount of oil, which contributes to their trade deficit. SWOT Analysis: The leading US strength is its entrepreneurial culture, while the main weakness is high health care cost. Energy independence has the opportunity to propel growth, while the major threat is the housing crisis, which will lower growth. Trading Strategy: An undervalued currency, high investment flow potential and favorable business environment lead to a positive outlook for US investments, which will also benefit from positive international actions.

Major Tobacco Consumers - Per Capita ► Press "Edit / Improve"

Greece Country Analysis ► (edit / improve) Greece (EUR) has large agriculture, tourism and service sectors. Currency: Greece is part of the Euro economic zone, whose currency has the potential to decrease in value on a global scale per the purchase price parity. However, Greece has positive investment flow potential. Investor Survey: Greece’s economic environment is favorable for long term economic growth due to many SWOT strengths and opportunities. Trade: Finland, the UK, Germany, the USA, and Italy are the top export partners, while the service industry is a fast growth sector of the economy. Commodity: Greece’s industrial sector transports large amounts of fuel around the world. SWOT Analysis: The leading Greek strength is their growing tourism industry, while no major weaknesses were discovered. IT development has the opportunity to propel growth, while no major threats were discovered. Trading Strategy: A moderately-valued currency, high investment flow potential and average business environment lead to a slightly positive outlook for Greek investments.

Hungary Country Analysis ► (edit / improve) Hungary (HUF) is slowly transforming from a centralized country into a capitalist-based economy. Currency: Hungary’s currency potential of moderate. They have significant potential according to the purchase price parity; however, investment flows are a bit weak. Investor Survey: Hungary’s economic environment is slightly unfavorable for long term economic growth due to a significant weakness: declining birth rate. Trade **: Netherlands, France, Germany, the US, and Austria are the top export partners. **Commodity: Hungary imports a significant amount of tobacco. SWOT Analysis: The leading Hungarian weakness is their declining birthrate. Trading Strategy: A moderately-priced currency, moderate investment flow potential and slightly negative business environment lead to a neutral outlook for Hungarian investments.

Japan Country Analysis ► (edit / improve) Japan (JPY), the second largest economy in the world, has an industrial, export oriented economy that benefits from its relationship with the USA and proximity to China. Currency: Japan’s currency (the Yen) is overvalued according to investment flow potential, the purchase price parity, and the interest rate parity. Investor Survey: Japan’s economic environment is moderately favorable for long term economic growth due to high scores on economic freedom and government transparency, but low scores on the SWOT Analysis. Trade: Indonesia, China, Singapore, the EU, Korea, and the US are Japan’s top export partners, while the leading industry is industrial manufacturing. Commodity: Japan imports many products because of its lack of arable land and energy resources. SWOT Analysis: The leading Japanese strength is their education system, while the main weakness is a declining birth rate. A major Japanese threat is the continuation of zombie companies. Trading Strategy: An overvalued currency, low investment flow potential and moderate business environment leads to a negative outlook for Japanese investments.

Spain Country Analysis ► (edit / improve) Spain (EUR) has – until recently – been a rapidly growing southern European economy that transformed from a centralized economic system to a more liberal, capitalist economy. Currency: Spain is part of the Euro economic zone, whose currency has the potential to decrease in value on a global scale per the purchase price parity analysis. Investor Survey: Spain’s economic environment is favorable for long term economic growth due to high scores on economic freedom and economic diversity. Trade: The UK, France, the US, and Italy are the top export partners, while the leading industry is discretionary goods and services. Commodity: Spain imports a significant amount of tobacco for domestic use. SWOT Analysis: The leading Spanish strength is European Union membership, while the main weakness is a declining birth rate. Trading Strategy: A moderately overvalued currency, average investment flow potential and favorable business environment leads to a slightly positive outlook for Spanish investments.

Source: http://www.nationmaster.com/graph/hea_tob_cig_con-health-tobacco-cigarette-consumption

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