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Diageo (DGE) £10.77

A resurgence in Guinness sales has put drinks giant Diageo back on track, giving a boost to its share price as investors raised their glasses to the interim results. (Read the full story: www.sharesmagazine.com/node/3292)

Shares says: The Guinness revival is welcome news, but the vodka developments are equally important. The recently acquired 50% stake in Dutch vodka brand Ketel One takes Diageo out of the auction for more mainstream rival vodka brand, Absolut. Diageo is chasing the premium end of the market, where margins tend to be higher. It is likely to pick up the remaining 50% in time. Diageo has been slow to break into China, but should do well. Although there are still some concerns over US consumers starting to pull back on spending, this is a long-term investment worth snapping up. BUY

The Times says: The concept of consumers drowning their sorrows in times of economic hardship may be something of an old wives’ tale but the half-year numbers issued by Diageo suggest that the world’s biggest drinks company is as well placed as any to ride a prolonged downturn. The shares trade at nearly 18 times current-year earnings and yield 3%. Not cheap, but Diageo has defensive qualities. HOLD

The City says: Diageo has reported satisfactory, but not knockout figures. The premiumisation policy is still holding up, the growth is being driven in international markets and the key brands (Smirnoff and Johnnie Walker) show no signs of losing their glitz. There is a divided camp in the investment community about the resilience of the brands in more difficult times. We wonder why the company is so feeble on dividend increases when it reiterates its 9% profit growth guidance.