Adding STZ to the Best Idea Long list
Constellation Brands is a growth company hidden in the slow growth consumer staples sector. Investors have the opportunity to add Constellation Brands at an attractive valuation during the pandemic/recession. The current valuation reflects concerns of a challenge to the beer business and further investment in cannabis. A growth company that can hit its targets during a pandemic and a recession deserves a premium multiple. The concerns about the beer business are understandable given the pandemic, recession, production slowdown in Mexico, the rejection of a new plant to support future growth several years into construction, and the competitive threat from hard seltzer.
We will present our case for STZ as a Best Idea Long next Tuesday, May 26, and address the questions facing the business.
Spending on groceries continues to stay elevated in our survey (KR, SFM, GO)
In the 9th week of our consumer survey, the share of respondents that said their grocery spending increased over the prior week increased by 1% to 44%. The percentage of respondents who said their grocery spending has decreased rose to 17%.
Grocery sales remain elevated in May (SFM)
Local grocers have seen an elevated spend that has been fairly consistent since the second week of April. This was due to the initial drawdown of food supplies following the stockpiling in the middle of March, as seen in the following chart from Womply (a CRM provider). The elevated spend points to the calorie shift from food away from home to food at home.
