Constellation Brands Inc (STZ)

(Market Call Minute.) A non-cyclical and can do quite well in a world where people are looking for predictability.

(Market Call Minute.) Loves this name. They are doing very well with Corona and their wine business. The consumer staples space is technically very strong.

They did good acquisitions. Growth of their brands is good. They are the premier player. They have delivered. It is still a growth stock.

(A Top Pick April 15/15. Up 34.6%.) This is an example where boring is fantastic. They have reported that they might be IPOing the Canadian Vintner collection.

Liquor and wine. The wine businesses are where they are starting to rip. They are one of the largest liquor distributor and consumer package companies out there. This is growing at 5% versus beer companies at 1% or 2%. Also, owns some very interesting beers. The wine is where they are really getting the pickup, because millennials are starting to want it, and there is a real move in wine sales. Yield of 1.02%.

In the alcoholic beverage space. Have a very broad portfolio of wine, imported beer and distilled spirits. Their major brand would be Corona in beer. This provides investors with both defence characteristics and growth attributes. Trading at 22X forward earnings. Has a 15% long-term growth rate, which is a good growth rate for a consumer staples name and still below market beta. Dividend yield of 0.89%.

Reported earnings on July 1 which were phenomenal. They continue to reap the benefits of their acquisition of Crown Import. A great global name. They are still making a lot of money in the beer sales, which is their real growth. Dividend yield of 1.06%.

Brands include Corona, Jackson Triggs, Modelo, Robert Mondavi, etc. A very, very defensive name. Yield is only 1.06%, but the CEO indicated he would probably look to increase that over time. They are really knocking it out of the park in all of their verticals and doing extremely well in vodka and whiskey. They’re undergoing an expansion into tequila and craft beer. Now that it is paying a dividend, it is going to be on a lot more people’s radar.

It’s the beer side rather than the wine side that is driving the business. They are gaining market share. It should continue to do well. Earnings are starting to accelerate. A lot of production is outside the US so their cost of production should be going down.

Positive news out this morning. Model price $80, negative 22%. Stock will probably go to $127 based on balance sheet so far. There is value elsewhere, but certainly this one is on a roll.