Daily Stock Pick: October 11th, 2022

Stocks seemed to be looking for a direction this morning after a losing session yesterday.  Recession fears fueled losses yesterday after JPMorgan’s CEO Jamie Dimon warned that the U.S. would likely fall into a recession within “six to nine months” and that the S&P 500 could fall another 20.  With the Nasdaq Composite trading at its lowest level in 2 years, many investors are looking for stocks that will likely hold up well during a recession.  

Today we’re highlighting a company with a decades-long history as an indispensable household name that’s been quietly diversifying, expanding, and increasing its efficiency.  Moreover, the stock is currently trading at a value compared to peers.  Investors in this stock can also look forward to a unique set of tailwinds as recession sets in.  

Data suggests that alcohol consumption increases during recessionary periods.  One study revealed that in the 2008 recession, total alcohol consumption increased even as the number of people abstaining from alcohol increased.  In other words, drinkers tend to drink much more in an economic downturn.

Beer, wine, and spirits distributor and manufacturer Constellation Brands (STZ) has over 100 brands, including Corona, Modelo, Svedka Vodka, Casa Noble Tequila, and Robert Mondavi.   Its robust portfolio of high-quality brands also provides investors with exposure to the cannabis industry via its Canopy Growth (CGC) investment.

As the most prominent beer import company in the US, Constellation has the third highest market share (7.4%) of all major beer suppliers and generates 77% of its consolidated net sales through beer.  The company has increased its production capacity four times over the last decade to meet demand and is currently focused on projects in Mexico.  With $800 million invested in Mexican Beer Projects in 2022 and renewed support from the Mexican government (via a recent commitment to continued access to government-owned water sources), the expansion is likely to be highly successful.    

Constellation topped Wall Street’s expectations for both earnings and revenue during its most recent release.  The company reported $3.17 per share compared to analyst expectations of $2.88 per share.  Revenue was up 12% year-over-year, coming in at $2.66 billion, beating the consensus estimate of $2.51 billion. 

Equities research analysts predict that Constellation Brands will post $10.91 earnings per share for 2022.  Its current price of $221.86 indicates a forward P/E of around 20x STZ seems undervalued compared to competitors like The Duckhorn Portfolio, Inc. with a P/E of 28x and Brown-Forman Corporation with a P/E of 35x.  Of 24 analysts offering recommendations for the stock, 18 rate it a Buy, and 6 rate it Hold.  There are no Sell ratings.  A median price target of $275 represents a 24% upside from the current price.  

Where to invest $1,000 right now...

Before you consider buying STZ, you'll want to see this.

Investing legend, Keith Kohl just revealed his #1 stock for 2022...

And it's not STZ.

Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.

Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.

Find that to be extraordinary?

Click here to watch his presentation, and decide for yourself...

But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.

Click here to find out the name and ticker of Keith's #1 pick...