Constellation Brands is one of, if not the best investment opportunities in consumer staples over the next 3-5 years. The mistake investors who did not own Constellation Brands made since the transformative purchase of the Crown beer business was to look one or two years ahead instead of the next five years. They missed one of the best performing consumer stocks over that time frame driven by long-tailed trends for fear of difficult comparisons. The current pandemic/recession presents another opportunity to purchase shares at an attractive entry point. Constellation Brands is a rare combination of a growth company and a consumer staple company with strong returns. A company that can hit its growth targets in a recession and a pandemic deserves a premium multiple.
One of the questions for STZ has been how will it respond in a recession. The cyclical part of the business in a recession is the on-premise business. Instead of the declines being dragged out over the course of the recession we have seen on-premise go to zero overnight. Off-premise has responded and consumers have purchased more for at-home consumption. As restaurants begin opening up on-premise will recover so we will see sequential improvement even as the economy remains in a recession.
We will present our case for STZ as a Best Idea Long next Tuesday, May 26, and address the questions facing the business:
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