Wednesday
Oct252006
Seven Reasons Why I Bought More DIAGEO PLC (DEO)
October 25, 2006 at 1:43 PM
What follows is a list of reasons that like an alcoholic ordering a Makers on the rocks*, I couldn't resist Diageo (NYSE ADR: DEO).
1. They make and sell booze. Although beer sales have been flat the trend towards drinking spirits doesn't seem to be subsiding anywhere in the world.
2. They are a nice hedge to a dollar based portfolio. Diageo is a global company and sells liquor brands like Smirnoff, Johnny Walker, Guinness and Cruervo all over the world. They are not stuck with only European or US trends. DEO is an ADR, the ordinary shares trade in the UK and are more pushed by those markets than the US. If the US Dollar falls, DEO will rise. (Conversely if the dollar rises, these ADRs will fall).
3. China is growing and consuming more of all things high end and branded.
4. Diageo owns Guinness and my two favorite beers are Guinness Extra Cold and Harp Lager. So it means I can do my part for my portfolio while participating in an activity I enjoy.
5. A yummy 4% Dividend Yield.
6. At a forward P/E of 14.5 , I get a relatively cheap Valuation for a premium beverage company in growing markets.
7. Some downside protection. After all, even in a recession people still have vices like drink.
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*Makers Mark is not a Diageo Brand.
Disclosure: I purchased Diageo (DEO) today and last week. Price = $72.41. I own Diageo ADRs and may purchase more in the upcoming weeks. I drink Guinness and Harp (But never in the same glass). While I admire the market segmentation created with the rainbow, I do not enjoy Johnny Walker of any color (Blue, Black, Gold, Green, Red or otherwise). I think Tanqueray Gin is good with tonic but would never put it in a martini.
Disclaimer: Nothing in this blog is meant to be specific financial advice or a recommendation to buy or sell. I do not give investment advice. Do your own research. Do not rely on anything in this weblog to make investment decisions. I do not log all my trades here. I only describe or mention those that I think might be interesting. Consult an investment professional familiar with your specific financial situation before buying or selling any security.
1. They make and sell booze. Although beer sales have been flat the trend towards drinking spirits doesn't seem to be subsiding anywhere in the world.
2. They are a nice hedge to a dollar based portfolio. Diageo is a global company and sells liquor brands like Smirnoff, Johnny Walker, Guinness and Cruervo all over the world. They are not stuck with only European or US trends. DEO is an ADR, the ordinary shares trade in the UK and are more pushed by those markets than the US. If the US Dollar falls, DEO will rise. (Conversely if the dollar rises, these ADRs will fall).
3. China is growing and consuming more of all things high end and branded.
4. Diageo owns Guinness and my two favorite beers are Guinness Extra Cold and Harp Lager. So it means I can do my part for my portfolio while participating in an activity I enjoy.
5. A yummy 4% Dividend Yield.
6. At a forward P/E of 14.5 , I get a relatively cheap Valuation for a premium beverage company in growing markets.
7. Some downside protection. After all, even in a recession people still have vices like drink.
____________________________
*Makers Mark is not a Diageo Brand.
Disclosure: I purchased Diageo (DEO) today and last week. Price = $72.41. I own Diageo ADRs and may purchase more in the upcoming weeks. I drink Guinness and Harp (But never in the same glass). While I admire the market segmentation created with the rainbow, I do not enjoy Johnny Walker of any color (Blue, Black, Gold, Green, Red or otherwise). I think Tanqueray Gin is good with tonic but would never put it in a martini.
Disclaimer: Nothing in this blog is meant to be specific financial advice or a recommendation to buy or sell. I do not give investment advice. Do your own research. Do not rely on anything in this weblog to make investment decisions. I do not log all my trades here. I only describe or mention those that I think might be interesting. Consult an investment professional familiar with your specific financial situation before buying or selling any security.
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