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Inflation fell to its lowest levels since 2021, but the FTSE 100 also slipped back this week. I’ve been taking the opportunity to add to an investment in my portfolio.
The UK’s largest index fell by 1%, but Diageo (LSE:DGE) shares fell by much more. And I decided to buy the stock as it got close to its 52-week low.
Demand issues
The Diageo share price has fallen from £34.91 to £27.15 over the last 12 months. The biggest reason has been weak demand in Latin America and the Caribbean.
This area accounts for around 10% of the company’s revenues, so it probably doesn’t justify the stock falling 23%. But the risk is that it doesn’t stop there.
Around 37% of Diageo’s sales come from the US, where a number of consumer discretionary businesses have been reporting weak demand. This could be a much bigger danger.
I wouldn’t buy the stock if it was still at the same level it was a year ago….
