Sunday share tips: British American Tobacco, BT Group, Luceco,

Buy shares in British American Tobacco, said the Sunday Times' Inside the City column as the cigarette maker tries to buy rival Reynolds American. Though the industry faces innumerable hurdles, cigarette companies keep rewarding those hooked on yield. As BAT made a £4.56bn profit from operations last year it hiked its total dividend 4% to 154p. BAT owns 42% of Reynolds and has offered $47bn for the remaining shares, which the US company is expected to reject.

BAT could still offer more, with the prize of a 40% market share in the US. The cigarette market across the Atlantic remains attractive with prices still cheap compared to the UK to offer years more of price increases. Reynolds also owns some attractive e-cigarette brands. However, investors have been warned that owning Reynolds would open up BAT to a sizeable risk of litigation from class action cases, though lower than when BAT sold its US business. Though still not cheap on a p/e basis, the shares have dropped since the bid was announced.

BT Group's shares were a sell for Questor in the Sunday Telegraph. Dividends and solid demand have always been the attraction at BT, but concerns about its long-running attacks by a regulator cheered on by rivals and a fast-growing pensions deficit make the risks outweigh the reward. The deficit swelled by £3.3bn in the last quarter and analysts warn the company could need to increase its current deficit payments by £1bn a year to plug the gap.

Cutting out the effect of its newly acquired EE mobile arm, BT's underlying revenue growth was an unattractive 1% in the recent quarter, with mobile data around a third cheaper than half a decade ago as voice call prices also wane. A growing worry for investors is the threat of competition, with TalkTalk likely to become more of a worry if rumours about a takeover by Vodafone or France's Iliad come to fruition. Broadband provider CityFibre is also growing at a rapid pace and has some heavyweight supporters on its register.

Luceco was a buy for Midas in the Mail on Sunday. The recently floated manufacturer and retailer of lighting products, which numbers Tesco, Argos and B&Q among its customers and has a strong trade/commercial arm, has a 40% market share in the UK. The company owns and operators its own factory in China and so can keep its costs lower and keep an eye on quality. The cables and leads arm grew revenues by a third in the last few years but LED lighting is where the excitement is.

Launched in 2013, Luceco's LED business made revenues of £23m last year and £14m in the first half of this, helped as companies and the public sector are incentivised to switch away from less efficient bulbs. Luceco has focused attention on the business market rather than consumer retail and has seen revenue grow to 23% of the group total and forecast to more than double in the coming five years.