DEO - Diageo: The Business Is Too Resilient To Justify The Sell-Off

2024-03-28 16:33:10 ET

Summary

• As valuations within consumer staples are cooling off, now is a good time to hunt for bargains within the sector.
• The high gross margin and the resiliency of Diageo's business model limit any potential downside from current levels.
• A turnaround won't happen overnight, but the current fiscal year is likely to mark a bottom in sales growth and profitability.

As the market has embraced the risk-on trade in recent months and the odds of a recession in 2024 seem to have disappeared, consumer staples have become the second-worst performing sector after utilities....

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