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Opinions Paul Harris, CFA
Diageo PLCDEOBUYMar 26, 2014
Paul Harris, CFAOwned
$121.51
Stock price when the opinion was issued
$80.42
As of Jun 18, 2026. Market Open.
food processing
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DON'T BUY
On Nov. 10, they issued an operating profit warning, because they're getting killed in Latin America and the Caribbean, because consumers are trading down to cheaper brands. Younger people are drinking less hard alcohol than previous generations, verified by a recent poll. One factor is the legalization of cannabis. Another is that companies have been hiking liquor prices too often. Also, the new weight-loss drugs reduce craving for booze.
food processing
TOP PICK
By far the largest distributor of alcohol beverages globally.
Focusing on premium brands(higher margins).
Sales rising which creates good profits.
Able to buy emerging brands such as George Clooney's vodka brand.
Rebound in travel increasing demand for alcohol.
High dividend yield is good for investors.
Not worried about looming recession, but high end products/brands won't be affected.
Lorne SteinbergOwned
food processing
PAST TOP PICK
(A Top Pick Jul 28/21, Down 6%) Is the fastest-growing spirits/drinks company now with revenue growth nearing 10%. It carries a huge portfolio of premium brands which are immune to a recession. DEO is a core holding. A world-class business.
Lorne SteinbergOwned
food processing
TOP PICK
#1 player globally. Focused on higher-end brands in all of the sectors they're in. So they can charge more, and their margins are growing. Spirits are gaining space on the shelf. Organic growth of 4-5%. Beverages are all about distribution, and they have the best. No one like them in the sector. Dividends grow over time. Yield is 1.58%. (Analysts’ price target is $200.07)
Lorne SteinbergOwned
food processing
TOP PICK
It is being impacted by CoVid19 because sales are down in China and fewer travelers aren't buying them. They have great brands, margins and solid dividend growth. They should do well in a recessionary environment. It is a great opportunity to get into a great business that has been too expensive for a while. (Analysts’ price target is $179.61)
Lorne SteinbergOwned
food processing
BUY ON WEAKNESS
A alcohol drinks company, trading at a high 21x earnings. Well-run. They've made and integrated good acqusitions, and have spent money on developing new products as well as marketing/sales. The U.S. is their best market. Great free cash flow. A lot of these companies are thinking of cannabis. DEO sells all over the world. Buy on pullbacks--they have periods when margins reduce when they launch products with marketing.
food processing
What is good is that there has been a consolidation on the drink side, but there is still room for more consolidation. Have some great brands. What has hurt them in the last little while is that they have gone through a period were margins had been compressed because they had to spend a little bit extra on marketing, especially in Asia. The fruits of this have not come through as yet.