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Best Stocks for the Next 10 Years: Diageo plc (ADR) (DEO)
U.K.-based Diageo plc (ADR) (NYSE:DEO) is the world’s largest seller of premium spirits, and its brands include Johnnie Walker scotch, Crown Royal Canadian whisky, Smirnoff and Ketel One vodkas, and Captain Morgan rum, among many, many others.
There is a lot to like about Diageo. In the developed world, drinkers are putting back less beer than they used to, but sales of wine and spirits have remained strong. This reflects both changing preferences by the aging baby boomers and the tastes of the millennials, who tend to prefer mixed drinks over beer.
But the real macro story here is Diageo’s exposure to emerging markets. Diageo expects to get fully 50% of its revenues from emerging markets this year, and that figure should rise with time.
“Emerging markets” might make some investors a little nervous these days given the volatility coming out of the region. But let me ask you a question: Ten years from now, which part of the world will you expect to have grown faster, the emerging economies of Africa, Asia and Latin America or the mature markets of the United States and Europe? I think you know my answer.
The rise of the emerging-market consumer is the macro trend of the next two decades.
Diageo trades for 24 times earnings and yields 2.3% in dividends. That is by no means “cheap” in a strict value sense, but remember that our time horizon here is 10 years. This is one of the best stocks to safely hold through 2025 and beyond, and I expect market-beating returns — even starting at today’s prices.
Source: InvestorPlace