Constellation Brands produces and markets branded beverage alcohol products, including beer, wines and distilled spirits. Products include: Paul Masson, Manischewitz, Monte Alban, Almaden, Barton%s Gin, & Corona. For the 9 months ended 11/30/00, net sales rose 3% to $1.85B. Net income rose 28% to $79M. Revenues reflect an increase in volume and a higher selling price. Net income reflects the absence of a $5.5M nonrecurring charge.

January 28, 2001

Constellation Brands (STZ) is the largest single-source supplier of wine, imported beer and spirits in the United States. Formerly known as Canandaigua Brands, STZ maintains a portfolio of over 185 branded products, which also includes cider and bottled water beverages. In order to benefit from strong growth trends in the alcoholic beverage industry, the company is currently looking to expand its geographic distribution routes. What’s more, the stock has been an excellent momentum play lately, climbing 36% since December. Currently, STZ has 18.45 million shares outstanding and 120 million shares authorized plenty enough for a 2:1 stock split. We feel that these characteristics make STZ an interesting split candidate play. As for the stock, shares have continued to advance sharply higher this week, continuing with a strong up trend on the chart. Furthermore, good volume of 150,000 shares pushed the stock up another 1.62% today, to a new all time high of $66.63. A quick advance above this level will set the stage for more gains. Should this occur, we will look for a tougher test to arise at the $70 mark. Upper resistance will likely be an even greater challenge at the $75 mark. Advances through resistance will present us with prospective entries, when volume of 100,000 can follow the advance. On the flip side, initial support will likely come at the $65 mark, strengthened by the 5-dma of $64.90. Secondary support will come at the 10-dma of $63.93, which will likely be our last foothold ahead of our stop at $62. With earnings still off in the distance (4/5), we’ll plan on using support and resistance levels to trigger our entries and exits.

Picked on January 28th @ $66.56
Change since picked 0.00
Stop Loss @ $62.00

February 1, 2001

Recent price increases in many of STZ’s alcohol products are helping boost profit margins and power earnings growth at a 20% rate. As for the chart, the company’s shares continue to make an amazingly smooth ascent to higher levels, despite a decline in volume. Because of this advance, we are now recommending that stops be raised to $65. This level still gives the stock some room to maneuver, while protecting against any downside volatility. However, should the current uptrend continue, which we think it will, we’ll look for the $70 mark to hold the next key resistance point. A strong close above this level could trigger a rally to tougher resistance at $75. Be prepared to lock in gains should the stock bounce sharply from either of these levels on good volume of 95,000 shares or better. For support, continue to look for a good intraday base at the 5-dma of $67.74, which has been providing good trendline support. Secondary support at the 10-dma of $65.86 could hold more strength, but be cautious about timing entries off this level, since our stop resides just lower at $65.

Picked on January 28th @ $66.56
Change since picked +1.98
Stop Loss @ $65.00

January 30, 2001

Through strong core branding, alcohol beverage purveyor STZ has been able to grow profits beyond analysts’ expectations. As it now stands, the company has beaten its earnings estimates by two to three cents over each of the past four quarters. For Tuesday, STZ shares continued a slow ascent to higher levels by closing up $0.62, or 0.92%, to $67.72. Volume came in lighter than previous days at 110,300 shares traded, but still managed to exceed the 3-month average of 94,954 shares. Keeping this in mind, we still think the stock has enough buying pressure to continue to higher levels. Should this occur, we’ll look for an initial resistance point to come at the all-time high of $67.90. A sharp advance above this level on strong daily volume of 95,000 shares or better will represent a momentum breakout and a potential area for entries. So, should the stock continue to trend higher, look for more challenging opposition to come at the $70 and $75 levels. However, if STZ retraces prior to advancing, we’ll look for the first base to arise at $66.50, bolstered by the 5-dma of $66.38. A secondary foothold could come at the $65 mark, braced by an intermediate high and the $10-dma of $65.08. Strong mid-day volume of 50,000 shares, when accompanying a bounce from support, could present traders with low-priced entry levels. We recommend keeping stops at $62 to protect against a downturn.

Picked on January 28th @ $66.56
Change since picked +1.16
Stop Loss @ $62.00