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Why Constellation Brands is a Must-Add to Your Portfolio


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You must grab the opportunity to add Constellation Brands Inc. (STZ - Analyst Report) to your portfolio as the stock seems to be on a roll. Armed with a formidable portfolio of well-known brands, it is the largest wine company in the world. Also, it has a dominant position in the premium wine and beer segment in the U.S. Notably, this Zacks Rank #2 (Buy) stock has jumped over 25% in the past one year. Further, it has a long-term expected earnings growth rate of 17.8%. Let’s delve deeper to know more about the stock.

What’s Leading to the Bullish Run for the Stock?

Constellation Brands’ 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. Recently, the company acquired High West Distillery, which boasts a robust portfolio of unique, award-winning premium American straight whiskeys and other spirits brands.

Alongside, the company is making meaningful leadership changes in an attempt to bring about innovations and improve its operational activities. Also, it is focused on enhancing points of distribution at retail and effectively executing its strategic merchandising initiatives to boost sales.

Moreover, Constellation Brands is on track with its glass plant expansion, which is expected to cater to more than 50% of the glass demand. Further, in an attempt to create value for its shareholders and strengthen the financial position of its Wine and Spirits business, the company is assessing the advantages of executing an initial public offer for a certain portion of its Canadian wine business. Also, it is a leading producer of wine in Canada and New Zealand.

Impressive Q2 Performance

Constellation Brands posted stellar second-quarter fiscal 2017 results, wherein both earnings and sales saw double-digit year-over-year growth, alongside exceeding expectations. This marked the company’s eighth and sixth consecutive earnings and sales beat, respectively. (Read: Constellation Brands Tops Q2 Earnings, Sales; Stock Up)

Results were backed by effective integration and growth of the company’s recently acquired brands; higher margins and strong consumer demand. Also, strength in Constellation Brands’ beer business, improving trends at its wine and spirits business, and solid overall depletion trends, which included the Ballast Point, Prisoner and Meiomi brands boosted results.

Consequently, management raised its fiscal 2017 view. It now envisions adjusted earnings in the range of $6.30–$6.45 per share, up from $6.05–$6.35 projected earlier. Moreover, the Zacks Consensus Estimate of $6.42 and $7.27 for fiscal 2017 and fiscal 2018 has increased 8 cents and 7 cents, respectively, over the past 30 days.

CONSTELLATN BRD Price and Consensus

From the above analysis, it is quite apparent that Constellation Brands deserves a place in your portfolio.

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) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Molson Coors, which is currently hovering close to its 52-week high of $112.19, has jumped over 25% in the past 12 months.

Anheuser-Busch has a long-term earnings growth rate of 11.1%. The stock has gained roughly 11.8% in the past one year.

Craft Brew, with a long-term earnings growth rate of 25%, has yielded a substantial return of over 130% in the past six months.

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