As much as I respect the track record of stocks guru Neil Woodford, I'm afraid I'm far from impressed by many of the blue chip shares sitting in his Equity Income Fund.
Take Imperial Brands (LSE: IMB) for example. The share has shed a shocking 29% of its value during the past 12 months alone, and you don't have to be a genius to work out why.
The FTSE 100 company saw total tobacco volumes fall 4.1% during the 12 months to last September, a result that saw net revenues at constant currencies slump 2.6% to £7.76bn.
More and more smokers are throwing their cartons into the wastebasket and so, to exorcise the spectre of extended revenues slippage, Imperial Brands is forking out a fortune on next generation products to mitigate diving demand for its traditional smoking devices.
But hopes that the likes of e-cigarettes or 'heat-not-burn' tobacco products will come anywhere near replacing the lost revenues across its traditional product is built on shaky foundations. Especially as legislators around the globe have the new technologies in their crosshairs.
In January, the Japanese government said that it planned to restrict the use of heated tobacco products in certain public spaces like hospitals and schools. This followed a report by Britain's Committee of Toxicology (COT) in December, presented to government, which revealed that "heat-not-burn products still pose a risk to users," according to its chairman Alan Boobis.
This advice is likely to go down like a lead balloon with regulators around the globe, and could provoke fresh prohibitive action curbing the use of Big Tobacco's combustible product alternatives.
The cat's whiskers
Clearly I'm far from convinced by Mr Woodford's endorsement of Imperial Brands. But there is a share in his Income Focus Fund that I am more than happy to champion: Softcat(LSE: SCT).
The IT infrastructure product supplier may change hands on a slightly expensive prospective P/E ratio of 24.3 times, but I believe this is a fair reflection of the stunning progress it continues to make across its markets.
Earlier this month, the FTSE 250 business advised that trading had exceeded management's expectations in the six months to January. Adjusted operating profit leapt 19%, thanks to "strong" trading across all its business segments.
City analysts are expecting Softcat to generate earnings growth of 10% in the year to July, and 8% in 2019. I fully expect profits to keep surging in the years ahead as the business gradually expands its range of services.
While Softcat is expected to keep on delivering solid earnings growth, Imperial Brands' rising revenue troubles are predicted to drive profits into reverse. Indeed, a 3% bottom line reversal is predicted for the 12 months ending September.
A 6% bounce is predicted for fiscal 2019 but, while the tobacco titan has supercharged investment in its key brands, such as Davidoff and Gauloises, to give profits a shunt in the right direction, I'm not convinced that these measures will stop the rot.
Therefore in my opinion, Imperial Brands is an unattractive share selection despite its undemanding forward P/E ratio of 10.2 times.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Imperial Brands. 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.