The FTSE 100 is an index made up of the 100 biggest companies by market capitalisation on the London Stock Exchange.
As the UK’s blue-chip index, it’s home to a vast range of high-quality companies that consistently deliver strong returns for shareholders.
After combing through it, I’m highlighting one FTSE 100 stock in particular that I’d happily snap up as we move into May. Here’s why.
A global company with much-loved brands
Diageo (LSE:DGE) is a British multinational alcoholic beverage company operating from 132 sites around the world.
Impressively, the group has over 200 brands with sales in more than 180 countries worldwide. Thanks to its vast array of labels across spirits and beer, Diageo has become a global leader in beverage alcohol.
Most prominent among those brands are Johnnie Walker and Smirnoff. Together, these constitute two out of four of the world’s four largest international spirits brands by retail sale value.
Diageo’s other labels include Guinness, Baileys, Captain Morgan, Gordon’s and Tanqueray.
Strong performance and strategic investment
At the beginning of the year, the FTSE 100 firm reported positive interim results covering the half year ended 31 December 2022.
Reported net sales reached £9.4bn, up 18.4% with growth across all regions. Similarly, operating profit grew 15.2% to £3.2bn.
The group also highlighted increased organic marketing investment by 6.8%, reflecting strong and consistent investment in the company’s much-loved brands.
From my perspective, the results paint a picture of a strong performance while also investing in sustainable long-term growth. To me, that’s a recipe for long-term success.
Changes at the top and challenges ahead
Needless to say there have been challenging times for all consumer goods categories lately, which may well persist going forward.
Continued reverberations from the Covid-19 pandemic, significant economic uncertainty and the war in in Ukraine all threaten to undermine group sales.
In addition, after 10 years with the company, chief executive Sir Ivan Menezes is stepping down from the board. In my view, a change at the top is always a leap into the unknown.
However, I’m reassured by the fact that Menezes’ successor is already a key member of the board. In fact, Debra Crew has a track record at various big names in the consumer staples sector.
A bright future outlook
I’m a big fan of Diageo’s obsession with building brands that stand the test of time. In my opinion, that’s what’s enabled the group to build a company that looks to me like it can continue to prosper in the long run.
What’s more, I’m confident the group can continue following through on its commitment to deliver sustainable growth in net sales, steady margin expansion and reliable cash flows.
As such, if I have the cash to spare, I’d snap up some Diageo shares in May and hold them for the long term.
