It’s been a great year so far for my Stocks and Shares ISA. Growth stocks like The Trade Desk, Intuitive Surgical, and Taiwan Semiconductor have jumped 50-90% higher. My largest holding, Axon Enterprise, is up by a whopping 71%!
I sold Nvidia in March after a very strong run, but I’ve heard through the grapevine that it’s also getting on okay. So that’s slightly frustrating, I mean good to see.
Ferrari‘s also raced 43% higher, which is perhaps surprising considering most other luxury stocks have struggled. Then again, the Italian carmaker’s order book extends well into 2026, meaning it doesn’t have to contend with profit volatility.
But it’s not just blue-chip stocks listed across the pond that are doing well. In the UK, shares of Rolls-Royce have skyrocketed 86% year to date, while BAE Systems is up by a respectable 17%.
From the positive to the ugly now though, with Moderna. Shares of the mRNA vaccine pioneer have dropped 46% in 2024 as post-Covid jab fatigue continues and sales slump. This one’s been a dog in my ISA and I won’t be adding to it.
A problem called Diageo
Another headache in my portfolio is Diageo (LSE: DGE). The stock’s down 10% year to date, 18% in 12 months, and 29% over three years.
My case for holding Diageo’s pretty straightforward. The company owns timeless brands like Johnnie Walker, Tanqueray, Baileys, and Guinness. I expect these to be selling globally at a healthy profit long after I’ve passed my ISA onto future generations.
The spirits giant is also a Dividend Aristocrat. Even last year, when sales were weak and underlying operating profit fell 4.8% to $6bn, it managed to rustle up a 5% increase to the full-year dividend.
Still, I have reservations about buying more shares.
Looming threats
My main worry is that the challenges the company’s facing may be structural rather than temporary (or cyclical, to use a technical term). In other words, sales are sluggish because people are drinking less alcohol for health or lifestyle reasons, rather than because they’re skint.
Could alcohol stocks like Diageo eventually head the same way as tobacco shares? It’s a sobering thought, as British American Tobacco is valued at seven times earnings versus Diageo’s 19 times.
Adding to my concern is the looming threat of weight-loss drugs like Wegovy. One in four adults in the UK is obese and over half are classed as overweight, according to the NHS. It’s a similar story in the US. But studies are showing that some people taking these medications don’t just lose weight — they also lose the urge to drink any alcohol.
The potential implications for Diageo’s sales make me want to pour myself a strong Irish coffee (with Baileys, of course).
My move
I’ve already sold two world-class companies in my portfolio this year (Nvidia and credit bureau and data specialist Experian). Since then, I’ve occasionally doubted those decisions. I’m loathe to make it three with Diageo.
Weighing things up, I’m going to keep holding for now. I’ll buy other stocks while I wait for the drinks giant to report its half-year earnings in January. Then take if from there.
This post was originally published on Motley Fool
