Sunday share tips: Diageo, Equiniti

Buy shares in Diageo, said the Sunday Times' Inside the City column. The maker of Johnnie Walker, Guinness and Baileys is trading around its all-time highs as it sees a long-awaited turnaround at its North American business, stiffened by stronger dollar chaser. Annual results released on 28 July are certain to confirm a wee drop in turnover, but the last six months of the year have been showing improvements - in North America in particular, where Diageo generates nearly half its profits.

Analysts see sales from the region growing more than 8% in the second half of the year. Furthermore, the weakening of the pound is expected to provide a kick of around £90m. However, shares in the spirits maker are highly valued, changing hands for over 24 times 2016 earnings. "That’s an eye-watering valuation, but with the gathering economic gloom and a forecast dividend yield of 3% or more in the next three years, Diageo looks a pretty good bet," is the recommendation.

Equiniti shares are a long-term buy, Midas advised in the Mail on Sunday as the company is bolstered by longstanding contracts with many of the biggest firms in the country and also offers access to the growing regulatory burden on companies. Equiniti is perhaps best known as a share registrar, connecting around 18m shareholders up to their investments, while also offering employee share schemes as this service grows in popularity among companies. Another division administrates pension schemes as an outsourcer for companies such as the NHS, police and with around 9m end customers.

With a third arm offering complaint-handling services to clients such as banks to both deal with payment protection insurance complaints and to combat money laundering, Equiniti has a broad base of solid revenue streams. Acquisitions are also a possibility to the product range. Doubters are concerned that the company will find a recession tough as it could mean fewer flotations and takeovers. Though with the weakening of the pound attracting overseas companies to take over British companies as with ARM Holdings the takeover market could thrive. Equiniti, whose interim results are scheduled for the end of the week, also thrived in the time after the financial crisis, when many companies raised emergency cash through rights issues.

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