We are buying 25 shares of Constellation Brands at roughly $241.06, increasing Jim Cramer’s Charitable Trust’s ownership to 400 shares and its weighting to 2.75%. Despite a recent drop in share price following a mixed quarter, we believe Constellation Brands is a good investment due to its discounted price-to-earnings multiple, strong beer margins, signs of improvement in the wine-and-spirits business, and expected increase in free cash flow as capital expenditures decrease. The company has also shown a commitment to returning cash to shareholders through share repurchases. While the Mexican beer business experienced some challenges, we remain confident in the brand loyalty of Hispanic consumers and the company’s marketing efforts to boost sales in the long run.
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The decision to invest in Constellation Brands comes after analysts downgraded the stock to hold from buy, citing a 6% drop in share price since the company’s last quarter results. Despite this, we believe in the long-term potential of Constellation Brands due to various factors including its financial metrics, operational improvements, and marketing strategy. The recent increase in share repurchases and management’s efforts to support its beer brands demonstrate a commitment to driving shareholder value. Additionally, positive signs in the Hispanic unemployment rate suggest potential growth opportunities for the company’s Mexican beer business.
The Hispanic consumer market plays a significant role in Constellation Brands’ success, particularly with popular brands like Modelo and Corona. The company’s strategic marketing investments and brand loyalty among Hispanic consumers provide a strong foundation for future growth. While economic challenges have impacted the Mexican beer business in the short term, we remain optimistic about Constellation Brands’ ability to capitalize on market opportunities and drive long-term value for shareholders. The company’s commitment to returning cash to shareholders and improving operational efficiency further support our investment thesis.
In conclusion, the decision to buy shares of Constellation Brands reflects our confidence in the company’s long-term prospects and ability to generate value for shareholders. Despite recent challenges, we believe in the strength of Constellation Brands’ brands, operational performance, and strategic initiatives. As a member of the CNBC Investing Club, subscribers receive trade alerts before Jim Cramer makes a move, following a strict protocol to ensure transparency and fairness in trading decisions. While there are no guarantees in investing, we remain optimistic about the potential of Constellation Brands and its ability to deliver sustainable growth in the future.
