"Diageo (NYSE: DEO) is the world's biggest spirits company with operations in over 180 countries," notes Alexander Green. The contributing editor to The Money Map Report explains, "Diageo is a non-cyclical, recession-proof
stock we can count on to deliver solid results no matter which way the global economy heads."
The advisor explains, "The company's brands are some of the oldest and most successful: Smirnoff vodka, Guinness stout, Bailey's Original Irish Cream, J&B and Johnnie Walker Scotch whiskies, Jose Cuervo tequila, Captain Morgan rum and Tanqueray gin – among others.
"For the first six months of fiscal year 2008, the company beat expectations. Sales rose by 5.7%. Earnings advanced almost twice as fast, hitting $2 billion. And dissecting the results further reveals continued strength in international and emerging markets, with operating profits up 20%.
"And three macro trends are pointing to an increase in demand for Diageo's products. First, a greater percentage of the world's population is reaching the legal drinking age.
"Its products are becoming increasingly affordable in emerging markets and data shows that the over-55 group is trading up to higher-end, higher profit margin spirits. (Approximately 75% of Diageo's revenues are derived here.)
"Second, management is also wisely using cash to build out the company's already market-leading portfolio. Recent and notable additions include a $105-million purchase of Rosenblum Cellars, a California winemaker and a 50/50 partnership to own the exclusive global rights to sell, market and distribute Ketel One vodka.
"Third, a reasonable valuation of around 15 times forward earnings and a sizeable share-repurchase program round out the investment case here."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
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