This fallen FTSE 100 darling looks like one of the best shares to buy in August

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I’m scouring the FTSE 100 for the best shares to buy before the next leg of the stock market recovery, and I’ve just spotted one I can’t wait to buy. It was once a darling of the stock market, and I reckon it will be again. So let’s hear the love for global spirits giant Diageo (LSE: DGE).

Diageo was once a fixture in my portfolio, and boy did we have fun. Its share price soared 75% in a couple of years, and paid me some dividends for good measure. In those days, I was a bit flighty, tending to sell my winners rather than run them. So I bid a fond farewell to Diageo and sought excitement elsewhere.

This time I’m back for good

That was a decade ago. Since then, its stock has climbed from just below 2,000p to 3,429p, a rise of 71%. With dividends reinvested, I would have doubled my money if I’d stayed faithful. That’s on top of the 75% I’d already made. Lesson learned.

I’m a more sober investor today. When I buy top FTSE 100 shares I aim to hold them for decades, not years. I’m keen to get Diageo back in my life and this time I can’t picture myself selling it. The long-term opportunity is just too strong.

Now looks like a tempting time to buy because its share price has dipped 7.86% in the last three months. Over one year, it’s down 11.5%. While there’s no guarantee it won’t fall further, chances like this don’t come along that often with Diageo.

The £77bn company may be listed in London but it’s a truly global business, selling more than 200 brands across 180+ countries. This massive diversification means that when one region struggles, sales in another may compensate.

Its biggest market is the US, inevitably, and lately spirit sales have weakened. This forced Diageo to cut growth prospects for the second half of this year and all of 2024. Yet with subsequent US jobs and inflation data suggesting a soft economic landing, I’m not too concerned. Instead, I see it as a buying opportunity. My horizon stretches way beyond 2024 anyway.

Despite the recent dip, Diageo isn’t cheap. It trades at 20.9 times earnings for 2023. That doesn’t worry me. I can’t remember the stock trading below 20 times earnings. If I’d spotted that, I’d have filled my glass.

Are we heading for a dry world?

The forecast yield is also relatively low at 2.36% for 2023 and 2.47% for 2024. Here’s why that doesn’t bother me either. First, Diageo’s yield is always relatively low. Second, it’s covered exactly twice by earnings. Third, management hiked the dividend by 5% to 76.18p per share. That’s also typical, giving me access to a rising income over time.

My long-term concern is that booze may fall out of favour with a health-conscious younger generation. There’s a sign of that trend in the UK. One day it could carry the same social stigma as smoking. That day still seems a long way off though, and tobacco companies are still rewarding investments despite the decline in cigarette smoking. I’ll buy Diageo in August. Here’s to a happy reunion.

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