We recently published a list of 12 Worst Depressed Stocks To Buy Now. In this article, we are going to take a look at where Diageo plc (NYSE:DEO) stands against other worst depressed stocks to buy now.
Will the “Fed Put” Come into Play?
With the recent pressure on the equity market from tariffs the market has been wondering if the Fed Put will come into play. On March 20, Mike Wilson, Morgan Stanley CIO, and Chief U.S. equity strategist, joined CNBC to discuss the likelihood of interest rate cuts during the year and the overall market outlook. Morgan Stanley expects the year 2025 to have only a single rate cut, however, if the market slows down more than expected then the Fed Put will come into play with another rate cut. Wilson noted that the Fed is going to respond to lower growth, however, the question that remains unanswered is how will the Fed measure this growth. According to Wilson, the labor market is one of the indicators that the reserve is watching closely. Currently, most of the weakness in the labor market is in the government sector as the government is trying to shrink the sector. Wilson noted that if this move spills over to the private sector then there is no doubt that the Fed will respond to that with another rate cut.
Wilson further elaborated that investors are not concerned about the next 12 months, rather they are more curious to know the current market situation. He noted that Morgan Stanley’s view of the market coming into 2025 was that the first half would be tougher due to the high expectations and the government sequencing its policies. One other reason behind this was that market expectations were too high whereas the reality was somewhat different. Wilson noted that we entered this year when the Fed was cutting rates and the valuations were high, so the current market slowdowns are partly due to the much-needed market correction as well. He also noted that there is a growth deceleration going on with the AI capital expenditure as well, which Wilson believes is good as now the expectations are more aligned with reality. He elaborated that these are the reasons why the firm believes that the 5,500 for the S&P 500 is a good level.
Looking ahead to the second half of the year, Wilson acknowledged potential tailwinds from growth-positive policy changes like tax cuts, deregulation, and lower yields. However, he argued that these are too distant for markets to price in currently. He also emphasized that while a “Trump put” may not exist, the “Fed put” remains active but would likely require worsening conditions in labor markets or credit and funding markets, scenarios that would initially be negative for equities.
Our Methodology
To curate the list of 12 worst depressed stocks to buy now we used the Finviz stock screener, Yahoo Finance, and CNN. Using the screener we aggregated a list of stocks that have fallen more than 15% over the past 12 months and are currently trading within 0% to 3% of their 52-week lows. Next, from this aggregated list we shortlisted stocks with more than 20% analyst upside potential. Lastly, we ranked the stocks in descending order of the number of hedge funds that have stakes in them (from best to worst), as of Q4 2024. Please note that the data was recorded on March 19, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of bottles of whisky and other alcoholic beverages from a winery.
Diageo plc (NYSE:DEO)
52 Week Range: 105.72 – 149.44
Current Share Price: $107.65
Analyst Upside Potential: 20.42%
1-Year Performance: -25.88%
Number of Hedge Fund Holders: 26
Diageo plc (NYSE:DEO) is a British multinational company specializing in the production, distribution, and marketing of alcoholic beverages. It operates globally, with sales in over 180 countries and a portfolio of approximately 200 brands. The company is one of the largest players in the alcoholic beverage industry and owns iconic brands such as Johnnie Walker, Smirnoff, Baileys, and Captain Morgan.
On March 13, Bernstein analyst Nadine Sarwat maintained a Buy rating on the stock with a price target of £27.70. During the first half of 2025, the company, despite a challenging environment, saw a return to organic net sales growth of 1%, with growth in four out of five regions, including North America. Management noted that they were able to maintain a 65% market share of its net sales in measured markets. The market has been challenging for Diageo plc (NYSE:DEO) as consumers are cautious due to economic pressures and opting for smaller pack sizes. Moreover, Super premium plus priced products are driving growth, while premium and below core price products are declining. Despite the progress, the stock has fallen more than 25% over the 12 months thereby making it one of the worst depressed stocks to buy now.
Ariel Appreciation Fund stated the following regarding Diageo plc (NYSE:DEO) in its Q4 2024 investor letter:
“During the quarter, we initiated three new investments, each in companies we have followed closely for a considerable time. At various points, we viewed them as missed opportunities; however, our experience with Mr. Market has taught us that patience often creates inevitable entry points. This quarter, some exciting opportunities presented themselves. The three investments are Amazon (NASDAQ: AMZN), Diageo plc (NYSE:DEO), and Uber (NASDAQ: UBER). We will discuss each in detail below
COVID was a bonanza for spirits companies, but the aftermath has proven challenging. The retail channel became over-inventoried, and as the on-trade (industry lingo for restaurants and bars) restocked their shelves and consumers returned to in-person gatherings, tough comparables led to slower growth rates— or even declines. In the stock market, Diageo serves as the bellwether for the spirits industry, and its woes began with questions about when the industry might return to growth. These challenges have since been compounded by a series of emergent narratives that weigh heavily on the stock today. These narratives include, but are not limited to, concerns about GLP-1 drugs altering behavior, Gen Z imbibing less than prior generations, economic struggles in emerging markets like Latin America and China, and fears of harsher regulations and warnings for the industry.…” (Click here to read the full text)
Overall, DEO ranks 2nd on our list of worst depressed stocks to buy now. While we acknowledge the potential of DEO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DEO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
