Top Stock of the Week: DEO

Alphanso’s AI Stock Research picked DEO as one of the top stocks of the week.

Alphanso Rating: 9.6/10

DEO (Diageo PLC) is a standout example of a high-quality company with solid valuation support, low risk of estimate cuts, and strong operational efficiency. 

Fundamental Metrics:

1. The annual EBITDA margin of 33.8% demonstrates the company’s strong competitiveness and business sustainability. The margin has been steadily growing as well demonstrating operational efficiency. 
2. The company has a steady forward revenue growth of 8% and a free cash flow yield of 3.5% pointing to a reasonable valuation and strong business sustainability. 
3. ROE of 45.3% is well above the sector median and demonstrates management and business efficiency.
4. Diageo is benefiting from innovation, premiumization, and the general health of the alcohol industry. Even Warren Buffet’s Berkshire added a stake in the company recently. 

Technical Metrics:

Based on the Alphanso model, the stock is trading below the expected channel (range) of $191.4 – $211.5.