Jim Cramer Guinness

Jim Cramer on Diageo (DEO) :


Diageo (DEO) has appreciated considerably since my last Case Study: Liquor Stocks and Hair of the Dog, back in January 2006. As of January 9th 2006, the stock price was (adjusted) $57.97. As of market close on Friday, December 8th 2006, the adjusted close was $77.45, for a gain of 33.6% in under a year!

Back then, Warren Buffett had just picked up some shares, the price/earnings ratio was much lower than its current 19.61, and the dividend yield ratio was 4.50%, compared to today's 3.70%. The stock is also near the top of its 52-week range, and has a higher debt/equity ratio than I would normally like, at 1.059. So while I still will enjoy their products - and think they're a great company, I don't see myself dipping into the Diageo liquor stock anytime soon.