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Strategies & Market Trends : Value Investing
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From: Harshu Vyas2/6/2026 11:39:49 AM
   of 79137
 
Jumping back into Diageo. So many "bear theses" out there that I think we're arriving at a bottom (cannabis "eats" drinking, socialising less = less drinking ...)

It's a fact that young people are drinking less. I can accept it.

But I don't think this trend will continue forever. My view is that my generation has been dealt a strange hand that won't persist forever. I suspect young people will come back to drinking in some form.

Either way, when you're earning an operating margin greater than 25% and earning a ROE of about 20% when your business is supposedly in terminal decline (revenues aren't dropping that much)... it's worth paying about 8x operating profits.

I don't like the debt. But I do think Diageo are a going concern - and probably can purge it should they need to.

I also do think Diageo isn't really understood in terms of their large international portfolio. Selling off non-core assets for more than the market thinks could be a way to quickly realise value.
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