Friday tips round-up: Diageo, Catlin Group
Consumer goods giant Diageo is seeing a slowdown in growth in one of its main markets, the United States. One would have thought the economic recovery and drop in the oil price would have translated into greater discretionary spending on the liquors and spirits which it purveys. Yet that has not been the case, the company´s boss, Larry Scwhartz, admitted. That is much the same as recent comments out from several of its peers. Increased discounting among top brands, in response to more price-conscious consumers, has been one factor
Beverages
21,855.94
16:54 03/05/24
Castelnau Group Limited
78.00p
16:50 03/05/24
Diageo
2,729.00p
16:49 03/05/24
FTSE 100
8,213.49
16:59 03/05/24
FTSE 250
20,164.54
17:00 03/05/24
FTSE 350
4,515.50
16:54 03/05/24
FTSE All-Share
4,469.09
17:14 03/05/24
Insurance (non-life)
3,539.49
16:54 03/05/24
As well, younger consumers have been shifting towards more trendy brands. Furthermore, Diageo chose to be aggressive on prices for its premium brands. All of the above means that analysts are now starting to project little to no growth for the firm in this financial year. The stock trades at 19 times earnings, which is starting too look too high. Avoid, says The Times´s Tempus.
Shares in Catlin Group, the insurer, have done surprisingly little this year, despite the fact that it is a perennial bid target and the recent approach from XL Group. Neither have investors reacted positively to the absence of huge catastrophe losses. Indeed, there can be no certainty the deal will go through. Even if it does, the value of the same is uncertain because about two-fifths of the purchase price will be paid in XL paper, which has been dropping. As if that were not enough, at about 1.4 times net asset value the price is not especially generous either. Lastly, there is no guarantee of a counterbid. Some investors may want to consider taking profits, although the more adventurous should hang in there, Tempus says.