Trade of the Day: Constellation Brands (STZ)

As you know if you’ve read any of my articles, I’m all about the data. I look at the fundamental and technical aspects of each stock in my Turner Analytics database to determine which ones I want to buy (and which ones I want to sell). Knowing how well a company is doing on earnings growth and sales growth, both independently and compared to other stocks within its industry, can tell you a lot about which stocks are strong and which ones aren’t.

And, in a market sell-off like the one we’ve been experiencing, I take particular notice of any stock that’s bucking the market trend and appreciating despite a field of declines. That’s exactly what today’s recommendation is doing.

Constellation Brands, Inc. (STZ) is a beverage company with brands in wine, beer and spirits. It started in 1945 as Canandaigua Industries Company (which sold bulk wine to bottlers), and by 1948, it had acquired two additional wineries. It continued to expand from there, and today, it produces a number of well-known brands, including Corona beer, Robert Mondavi wines, Svedka Vodka, Cook’s champagne, Casa Noble tequila and Modelo Especial beer.

In fact, Constellation is currently the third-largest producer of beer in the United States, and the company recently announced plans to spend $1.5 billion to build a new brewery in Mexico that will help it keep up with growing demand.

Data-wise, this company is a Strong Buy. It has a very good fundamental score of 68 out of 100, and a very good technical score of 71 out of 100. STZ stock also continues to climb higher in a very negative broader market, and it has been trading above its 200-day moving average for nearly three years.

Trade of the Day: Constellation Brands, Inc. (STZ)

STZ really caught my attention when it posted a lifetime high ($154.31) on Jan. 7. This came after the company’s better-than-expected Q3 earnings report, which included $1.6 billion in revenue (a 1.2% surprise) and $1.42 earnings per share (an 8.4% surprise).

I’m confident that Constellation Brands will continue its strong performance. Not only does it have a historical trend of growth (as you can see in the graph above), it shows strong fundamentals today. The Turner Analytics database gives it full marks (five out of five) for its stock price and its return on equity. It also receives excellent ratings (eight out of eight) for multi-year revenue and earnings growth.

This looks to be a long-term steady growth stock, and I recommend entering the position at $150 or better. Your stop is $130.86, and your near-term target is $161.14.

Mike Turner and his team of software engineers developed Turner Analytics, a sophisticated software market and trade-timing system that provides unbiased, quantifiable recommendations on thousands of equities and rates, ranks and scores these equities from best to worst in an easy-to-use on-line tool for individual investors. He is also the editor of Signal Investor.

Most recently, Mike launched Quick Hit Trader. This trading service is based on weekly analysis of the 6,000+ stocks and ETFs in his proprietary Turner Analytics computer stock-rating system. Every Monday before the market open, Mike emails subscribers his three best trades for the week, including the buy, sell and target price.

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