The concept of consumers drowning their sorrows in times of economic hardship may be something of an old wives' tale but the half-year numbers issued yesterday by Diageo suggest that the world's biggest drinks company is as well-placed as any to ride a prolonged downturn.

There can be few consumer-facing companies that will not be looking on enviously at its first-half net sales growth of 7 per cent, underlying earnings up 12 per cent and organic operating profits up 9 per cent. Not only that, but it reiterated its full-year guidance of organic profit growth of 9 per cent.

One reason Diageo has performed so well is its continuing focus on premium, super premium and even ultra premium brands, which carry a much higher margin than commoditised own-label products. Such brands are increasingly sought out by the moneyed classes, who are less likely to cut back on what Paul Walsh, the Diageo chief executive, described as “an affordable indulgence”. Mr Walsh cited the example of a typical American Scotch whisky drinker who buys an average of three bottles of Johnnie Walker a year. He said a consumer slowdown was unlikely to make such consumers cut back their purchases, adding: “For an awful lot of consumers life continues as normal.”

To support this “premiumisation” process, Diageo has in recent weeks gone out and bought Rosenblum Cellars, the California wine maker, for about £53 million, paid £460 million for a 50 per cent stake in Ketel One vodka and acquired the distribution rights to Zacapa rum plus an option to buy a 50 per cent equity stake in the brand. The Ketel One deal was probably the most important of the three as it allowed Diageo to withdraw from the highly competitive auction of Absolut vodka and gave it access to a brand that arguably has far more growth potential than its more mature Swedish rival.

One of the reassuring aspects of Diageo's first-half performance was the broadly based nature of the growth, both geographically and by brand. In the key North American market, underlying profits were up 7percent, while its European region, where the trading environment has not been easy, was up 2 per cent, helped by the return to growth of Guinness in Great Britain and Ireland.

The main weakness in the figures was the 12 per cent profit decline in Asia Pacific, where an otherwise acceptable performance was marred by the loss of its import licence in Korea, forcing it to sell its products through a third-party distributor. It should get its licence back in the near future but it has been a painful reminder of what can happen in emerging markets. But the Korean glitch should not detract from the investment case. Even after its recent acquisitions, Diageo is throwing off enough cash to complete this year's £1 billion share buyback programme.

At £10.81, up 47p, the shares trade at nearly 18 times current-year earnings and yield 3 per cent. Not cheap, but Diageo's defensive qualities make them a hold.

Hargreaves Services

Britain may be an island built on coal but most of the stuff burnt in our power stations and homes now comes from overseas - from Russia, China and South America. That switch has made good business for AIM-listed Hargreaves Services, which operates import terminals at Immingham and Newport and is the country's largest independent haulier of the fossil fuel.

But Hargreaves, whose shares have more than doubled since listing two years ago, is a difficult company to categorise. It now owns Monckton, Britain's only remaining coke works, and last year bought the nearby Maltby colliery from UK Coal, 60 per cent of whose production is supplied to Drax under a three-year contract.

Elsewhere, it carries out stock control and waste management for power stations, and increasingly, petrochemical plants, while its German start-up supplies coke and refractory minerals to ThyssenKrupp.

Hargreaves is not a commodity play. Rising coal prices have improved the long-term viability of Maltby but also mean increased working capital tied up in stock.

Meanwhile, Drax is locked in at prices below spot. But at 549p, or 12 times current-year earnings, Hargreaves's allure is as an acquisitive fast-growing group that has not put a foot wrong since float. Buy

Dawson Holdings

If you are reading this in London and the South East, most of the South Coast or pockets of the Midlands and the North West, there is a strong chance that Dawson Holdings played a part in getting your newspaper into your hands - or more specifically to your newsagent. But performing the nightly miracle between publisher and retailer is not at first sight an especially attractive business: revenues are flat, volumes are falling and fixed costs are high. Besides, Dawson, with about 23 per cent of the UK market, is the industry's minnow, trailing John Menzies and the demerged Smiths News.

Ironically, where Dawson scores is in its relative inefficiency: its operating margins of just over 1 per cent are the lowest among that trio, and under a new management team, have the greatest scope for improvement. Dawson's other draw is its pace of diversification. A recent acquisition in marketing services, means that, together with its airline news and academic book distribution divisions, activities outside its core supply chain should now account for 15 per cent of sales but 35 per cent of operating profits.

At 99p, or under ten times 2008 earnings, Dawson offers reasonable value in a defensive niche. But it is a secure 7.6 per cent dividend yield that gives greater reason to buy.

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