Whilst you may not be familiar with this global alcoholic beverages group, it’s almost certain that you are accustomed with its enviable portfolio of well-known brands which include Johnnie Walker, Guinness, Smirnoff, Baileys and Captain Morgan. The group has operations in 180 countries with exposure to large, developed markets such as the US, as well as fast-growing emerging markets in Asia and Africa. What’s worth noting is that Diageo has recently reported an improved performance in its important North American market and may benefit from the weak pound and any fiscal stimulus from the new US administration.
Investors should recognise that trading remains good with the group citing growth in whisky, US spirits and India as reasons why. Moreover, it is confident of achieving mid-single digit sales growth and improving its profit margins over the next three years. Diageo has a strong product mix and geographical diversification so when you combine this with resilient sales in the US market, excellent long-term prospects for emerging markets, continued improvements in cost-cutting and a relatively good dividend yield, then this could be a company worth watching.
price on 28 December 2016: 2097p