Diageo plc (ADR) (NYSE:DEO)

Everyone loves to drink especially when times get tough. Diageo will profit from this.

Diageo (NYSE: DEO)

Todd Wenning

Alcohol isn't as despised by the general population like tobacco is, but that's largely a matter of timing (see Prohibition). Take a swig of ol' grandpappy's cough syrup in public today and you'll get a completely different reaction than if you'd lit up a cigarette. Alcohol is still a vice, however. There are no two ways about that. And when it comes to picking vice stocks, I love those with best-of-breed brand names in its bullpen.

UK-based Diageo is chock full of them. Consider:

Beer: Guinness, Red Stripe, Harp, Smithwick's
Champagne: Dom Perignon, Moet & Chandon
Cognac: Hennessy
Gin: Gordon's, Tanqueray
Liqueur: Baileys, Romana Sambuca, Godiva brands
Malt Beverages: Smirnoff Ice
Rum: Captain Morgan
Schnapps: Black Haus, Goldschlager, Rumple Minze
Tequila: Jose Cuervo
Vodka: Smirnoff, Ciroc, Ketel One
Whiskey/Scotch: Crown Royal, J&B, Johnnie Walker, Seagram's
Wine: Sterling

Many of these premium liquor brands are the "first name" that pops into consumers' mind -- "Rum? Captain Morgan. Tequila? Cuervo." That's the sort of brand awareness that makes Diageo top-dog in this market.

Diageo has solid management with CEO Paul Walsh (7 years on the job) and CFO Nick Rose (9 years) running the show together for some time now. With the average CEO sticking around for less than five years these days, Walsh and Rose's length of stay is encouraging. They've also established a tradition of being shareholder friendly -- over the past decade, Diageo returned over $20 billion in share buybacks and in 2007 alone paid $1.7 billion in common dividends. The company's stated dividend policy is to grow payout by 5% annually, which will make dividend-sensitive investors happy but also gives Diageo enough cash to reinvest in the business. What's more, thanks to a tax treaty with the UK, US investors don't pay foreign withholding tax on Diageo dividends.

With a wide geographical reach extending into 180 global markets, Diageo is another fine way to increase international exposure in your portfolio.

Buy below: $75

We'll keep you posted on any future developments with DEO.

Liquids got to have them.

A razor above 52-week lows, and good booze company. Yes costs are increasing, but people will always drink.

Sad people drink!!!

Nice defensive play for any downturn. Has the world's best liquor brands. Will perform well in a recession, and people will be toasting the (eventual) recovery.

Yeah, people might want to drink more in this economy, but what I love about DEO is its strong brands. Scotch still accounts for a lion share of their profits, but I see a lot of potential in beer and spirits, particularly with vodka and Guinness. I'm interested to see what the Ketel One deal brings to there bottom line.

And I don't buy the notion that people won't "trade up" for DEO's premium brands. maybe less people will have Johnnie Walker Blue as their after dinner drink, but are people going to ditch Smirnoff and Tanqueray for moonshine? I don't see it. DEO has a solid portfolio with a lot of growth left in it.

Fortune 40 Foreign Value

A good Vice stock that has been falling for a unknown reason. People get drunk no matter what the situation especailly if there losing their home!

Diageo plc (ADR) or DEO The company is engaged in premium drins business with a collection of international brands. Just remember the boys at Busch. DEO is in the process of building a distillery on St. . Croix. Bet they make some killer rum! Good product, good stock. People will drink and smoke their cigarettes. An energy crunch only adds to the need for it. BUY, BUY!

Sin stock. Moat. Premium brands. Good dividends. Global exposure for revenues.

Creating a portfolio based on calling outperform on every alcohol, tobacco, pornography and gambling stock I can find.

I decided to create a portfolio with only products or services that I use without regard to price/value in order to compare with my own personal port

Should do well considering that they own a collection of established brands of alcohol - when the market's bad...people drown their sorrows in the stuff...when the markets good - they go out and party. Either way, it should do well over the long haul.

Diageo's business model shouldn't be very sensitive to economic conditions and US investors should benefit since much of their operations are in other currencies.

Steady business (booze), decent dividend and reasonable multiple. What's not to like?

Real holding (LSE at 9.81 GBP)

High Margins, strong brands (moat), low pe, nice emerging markets growth prospects, should be a nice stable ride.

Great growth opportunity. Look for 20% growth or more over the next 3 years.

beer... good...