I realize the stock market is still struggling with geopolitical issues, a nearly 3% decline in first-quarter GDP and the specter of increasing interest rates, but I have a trade that is performing outstandingly well in the current market. Constellation Brands (STZ) has been a leader in the industry of Beverages – Wineries and Distillers for over two years, and it has nicely outperformed the larger Consumer Discretionary sector.
A $16.9 billion company, Constellation Brands is impressive. I particularly like the nearly parallel trends of both the stock’s Friday closing prices and the 10-week moving average. I find that when these two pricing trends move into a parallel up-trending pattern, the odds increase significantly that the stock’s price will move higher.
Smart traders are out in force buying up growth companies like this one on the cheap, so you’re going to want to add this position quickly. If I was forced to buy just one stock right now, I’d pick up as many shares of this top beverage company as I could.
STZ’s growth potential is huge, and more buyers will jump in as the story becomes more apparent. After a strong close to fiscal-year 2014, analysts estimate that fiscal-year adjusted earnings to be in the range of $3.86-$4.22 per share, compared to $3.25 last year. Keep an eye out for the details in the company’s earnings release, which is scheduled for this Wednesday, July 2.
STZ has moved up by more than 300% in the last three years — and, based on my analysis, it could go a lot higher. The expected move is about 7.8% from current levels. The stock is a fundamental rock-star, with a rating of 76 out of 100. The technicals are also looking very strong, with a rating of 91 out of 100.
The big institutions seem to love the stock, holding over 90% of all outstanding shares. I recommend entering this trade at $88 and setting a stop limit at $79.74.
Mike Turner is an engineer turned entrepreneur with more than 20 years’ experience in systems development and enterprise-level software applications and 15+ years in finance and stock market strategies. He is the founder of Signal Investor and Turner Analytics.
Mike’s background in finance, computer science and engineering provide a solid foundation for Signal Investor’s rule based trading approach. Turner Analytics provide members with access to the software Mike created and uses to make his stock, option and trading recommendations. Click here to get Mike’s unique take on stocks through technical and fundamental analysis.