Investors seeking momentum must take a look at the world’s largest wine company, Constellation Brands Inc. (STZ - Analyst Report) , as this stock has all that’s needed to grab a spot in one’s portfolio. Right from stock price movement to earnings history, a formidable portfolio of well-known brands and strategic growth initiatives, Constellation Brands has left no stone unturned to please investors. Notably, this Zacks Rank #2 (Buy) stock hit a 52-week high of $173.55 yesterday, though it eventually closed at $168.60. Also, it has yielded a return of over 25% in the past 12 months and has a long-term expected earnings growth rate of 17.8%.
What's Driving the Stock?
Constellation Brands recently posted stellar second-quarter fiscal 2017 results as both top and bottom lines registered double-digit year-over-year growth and exceeded expectations. While the quarter marked the eighth consecutive earnings beat for the company, we note that it has surpassed sales estimates for six straight quarters now.
Results were backed by Constellation Brands’ effective integration and growth of its recently acquired brands, higher margins across its portfolio, along with strong consumer demand backed by superb marketing and sales strategies for its core, higher margin and premium brands. Also, the splendid quarter prompted management to raise its fiscal 2017 outlook. (Read: Constellation Brands Tops Q2 Earnings, Sales; Stock Up)
Concurrently, Constellation Brands announced a deal to acquire High West Distillery, for nearly $160 million, which boasts a robust portfolio of unique, award-winning premium American straight whiskeys and other spirits brands. We believe its addition to Constellation Brands’ kitty is likely to be profitable for the company by helping it enter and expand in the superior craft whiskey space.
Notably, Constellation Brands has a dominant position in the premium wine and beer segment in the U.S., and is also a leading producer of wine in Canada and New Zealand. We believe this provides it with a competitive edge and further bolsters its well-established position in the market.
Moreover, the company’s consistent focus on brand building and its initiatives to include new products in its wine and spirits business are the key revenue drivers for the stock. Owing to its strategic endeavors, the company is witnessing robust depletion trends and increasing market share in the U.S. wine and spirits category. This was demonstrated by the recent Meiomi acquisition which reached double-digit depletion growth in first-quarter fiscal 2017.
From the above analysis, it is quite apparent that the time is ripe for adding Constellation Brands to your investment basket.
Other Stocks to Consider
Other favorably ranked stocks in the same industry include Molson Coors Brewing Company (TAP - Analyst Report) , Anheuser-Busch InBev SA/NV (BUD - Snapshot Report) and Craft Brew Alliance, Inc. (BREW - Snapshot Report) .
Molson Coors has jumped over 31% in the past one year. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Anheuser-Busch, with a Zacks Rank #2, has a long-term earnings growth rate of 12.5%. The stock has gained roughly 16% in the past one year.
Craft Brew, a Zacks Rank #2 stock, has a long-term earnings growth rate of 25%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>