DIAGEO

Ticker: DEO, Buy below $145.

Diageo Plc  is a British multinational alcoholic beverages company.

Why I Would Buy

  1. Opportunistic Buy – Take advantage of coronavirus induced crash to buy a high quality company.   
  2. Industry – Alcohol is a recession resistant business.
  3. Strong Brands – Diageo owns a large portfolio of leading alcohol brands around the globe.
  4. Return on Equity: Diageo has earned an eye-popping 25+% returns on equity annually for all of last decade.
  5. Low Payout: The 2% dividend is just 55% of income.

What Could Go Wrong

  1. Not A Screaming Bargain – Even with the crash, DEO is trading at 8.5 time book value, and 22 times earnings.
  2. Coronavirus – Extent of impact on the worls economy is an unkown.

Disclosure: I am long DEO, please read additional disclosures here before taking any action based on this post.

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