Does Diageo plc (DEO) Have Long-Term Growth Prospects?
Artisan Partners, an investment management company, released its “Artisan Value Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. US Treasury yields saw a significant decline towards the end of 2023, which led to a massive surge in the last two months of the year for US stocks. The fund’s Investor Class ARTLX, Advisor Class APDLX, and Institutional Class APHLX returned 9.75%, 9.75%, and 9.79% respectively, in the quarter compared to a 9.50% return for the Russell 1000 Value Index. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2023.
Artisan Value Fund featured stocks like Diageo plc (NYSE:DEO) in the Q4 2023 investor letter. Headquartered in London, the United Kingdom, Diageo plc (NYSE:DEO) engages in the production and distribution of alcoholic beverages. On March 13, 2024, Diageo plc (NYSE:DEO) stock closed at $150.39 per share. One-month return of Diageo plc (NYSE:DEO) was 1.74%, and its shares lost 13.88% of their value over the last 52 weeks. Diageo plc (NYSE:DEO) has a market capitalization of $83.88 billion.
Artisan Value Fund stated the following regarding Diageo plc (NYSE:DEO) in its fourth quarter 2023 investor letter:
"One of the areas that hasn’t participated in the year’s rally has been consumer staples. We identified two staples stocks that meet our three margin of safety criteria (attractive business economics, sound financial condition and attractive valuation), purchasing Diageo plc (NYSE:DEO) and Kerry Group.
Diageo is a global leader in alcoholic beverages with an impressive collection of brands across spirits and beers. The company’s portfolio of over 200 brands provides diversification and allows it to meet consumer trends. A key focus for growth has been premiumization, and today, Diageo’s portfolio is now more heavily weighted toward premium segments. Shares are trading at multiyear trough multiples on fears of growth normalizing after a COVID-induced bounce and premiumization headwinds as some markets are showing consumers trading down to value alternatives. In the near term, margin expansion will likely be constrained, but the company generates meaningful free cash flow and returns it to shareholders through dividends and share repurchases. Over the past five years, Diageo generated £12 billion FCF and returned £16 billion to shareholders. Although spirits are more cyclical than other staples, the company’s growth prospects are better long term, and we believe the current situation has provide us an attractive investment opportunity."
A close-up of bottles of whisky and other alcoholic beverages from a winery.
Diageo plc (NYSE:DEO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Diageo plc (NYSE:DEO) was held by 28 hedge fund portfolios, compared to 30 in the previous quarter, according to our database.
We discussed Diageo plc (NYSE:DEO) in another article and shared the list of best brewery and distillery stocks to buy. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
