Can Diageo plc (ADR) (DEO) Outperform BEAM Inc (BEAM)?

Beam has only been an independent company since October 2011, making it impossible to gauge its earnings or growth sales record. However, investors have certainly been keen on the stock, and the company’s share price has gained nearly 50% since its separation from Fortune Brands.

Diageo’s track record of growth is excellent, and one key element of this success is its strong presence in emerging markets. Beam is more highly focused on U.S. and western markets, which I feel may inhibit its long-term growth potential.

Should you buy Diageo or Beam?
Diageo’s share price has risen almost continuously since mid-2009, as have its earnings. The company’s growth strategy does not yet seem to have run out of steam and if I was a growth investor, I might be prepared to invest in the hope of more to come. I am especially keen on Diageo’s strong and growing presence in emerging markets, which offer far more growth potential.

While neither Beam nor Diageo can be called a value investment, Diageo does look better value on the basis of expected future earnings, and its stronger dividend profile would also make it my choice for income from the drinks sector.

The article Can Diageo Outperform Beam? originally appeared on

Roland Head has no position in any stocks mentioned. The Motley Fool recommends Beam and Diageo plc (NYSE:DEO) (ADR).

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