Whats next for the Diageo share price?
When I last covered Diageo (LSE: DGE), its share price was hovering around 3,000p. Since then, prices have been rising steadily, now sitting at over 3,400p. Not only is this vastly higher than its March 2020 lows, and exactly a year ago, but its also higher than its pre-pandemic value. Considering this encouraging performance, Ive been taking a look at where I think the Diageo share price will go next. Pandemic problems  The multinational alcoholic beverage producer had a turbulent time during 2020. Persistent global lockdowns forced widespread closures across the hospitality business. Net sales and net cash fell 8.4% and 29%, respectively, compared to 2019 figures. Poor financial performance was reflected in the share price, which fell to just 2,400p in March 2020. 5G is here  and shares of this sleeping giant could be a great way for you to potentially profit! According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air And if you click here well show you something that could be key to unlocking 5Gs full potential...  That said, Diageo finished the last sixth months of 2020 with organic sales up 1%. This can be attributed to the increases in household alcohol consumption forced by hospitality closures. For example, in the UK, spirit sales were up a whopping 15% during lockdown. Current Diageo share price  The Diageo share price is up 19.2% year-to-date. In addition to this, it has gained over 40% since its March 2020 lows. Looking at the price-to-book (P/B) value of Diageo and comparing it to competitors Heineken and Carlsberg may help me answer this question. Diageo is currently trading at an 11.5x P/B ratio, which means it is trading at 11.5 times its book value. Heineken and Carlsberg are trading at 4.5x and 4.3x P/B ratios respectively. This shows me that the Diageo share price is overvalued compared to its competitors, which discourages me from adding this stock to my portfolio at current prices. Future trajectory  Yet the recent performance of Diageo has been very encouraging. Past performance should not be indicative of future returns, however, there are several reasons I am confident the Diageo share price could keep rising. Firstly, Diageo has said it is expecting an organic operating profit growth increase of 14% in 2021. The firm stated this would come primarily from the reopening of its markets across the world. If such results come to fruition, I would expect a rise in the Diageo share price. I also like the longevity that Diageos product portfolio provides. Household beverage names such as Smirnoff and Baileys will still be consumed decades from now. In addition to this, Diageo is always expanding its product arsenal, with a notable purchase of Aviation Gin in 2020. Constantly expanding its product portfolio is a necessity for Diageo if it wants to remain a frontrunner in the industry. Although the pandemic does still provide some uncertainty moving forward, I think that the Diageo share price can continue an upward trajectory. The stock may be overvalued compared to competitors; however, we have seen stocks like Tesla trade at almost 40x book value and still continue to grow. Therefore, I like the look of Diageo as a solid growth addition to my portfolio.