Stock price when the opinion was issued
It's been up and down and down. It faces headwinds from the weight-loss drugs reduing consumption of alcohol, potential tariffs on Mexican goods (Modelo is a major brand of theirs), and Latinos, a key consumer, could be deported under Trump. But STZ spews cash and is growing, leading to Trump exempting STZ from tariffs. He just added more shares. He wants STZ to talk about this big brewery they're building in Mexico. He hopes they launch a huge share buyback. This is tricky.
Yesterday, LVMH reported a 36% decline in wine and spirits. That is shocking for the entire alcohol sector, and LVMH is the best performer. STZ is -27% in the past year. No alcohol stock is willing to admit to an existential threat, but rather than drinking is normalizing after Covid. He disagrees. Cannabis is cheaper than alcohol, there's a new advisory that links alcohol to increased risk of cancer, younger people are drinking less, and the weight-loss drugs are limited alcohol cravings. What could turn this around is offering something new, like new drinks and better prices (stop increasing prices).
Big selloff in January, with a lower low in February. Now trying to establish a higher low in March. If it can hold $175, this is a reverse head and shoulders pattern. Looks like a pretty strong technical base forming; for confirmation, need it to break out ~$185-190 to complete the base. If it does, really interesting. RSI still fairly weak.
Last week, it reported stellar numbers but shares still fell, a victim to persistent misconceptions. Their Modelo is the #1 beer in the US and is gaining market share. Pacifico sales are up 21%. STZ operating margins were up 260 basis points. They beat Q1 EPS. Shares should be selling at $300. The problem is STZ also sells hard liquor, which Wall Street has given up on as well as doubts that beer's popularity is waning. Has huge free cash flow, are buying back shares, and is expanding facilities. Other threats are the weight-loss drugs and the popularity of cannabis. He won't abandon this stock though.