Diageo: Good Things Come To Those Who Wait

Summary

• There is no doubt that Diageo is a premium business, but its shares come with an equally premium price tag.
• We sold our entire position in late 2021/early 2022, locking in a total return of over 55% in under 2 years. We maintain our "sell" rating at the current valuation.
• Our recent analysis indicates that high quality businesses such as Diageo are commanding premium valuations as investors seek relative safe-havens amidst uncertainty.
• For some investors, these premiums may be worth paying. However, as value investors, our preference is to wait for a period of more attractive valuations.
• As the slogan used by Diageo in their well known Guinness commercials goes: "Good things come to those who wait."

Presley Ann

Our view

Diageo plc (NYSE:DEO) is a UK-listed global manufacturer of spirits and other alcoholic beverages. Its brands include a number of global iconic drinks including Johnnie Walker, Guinness and Captain Morgan. Like many of its top-shelf offerings, the company’s shares attract a

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.