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 6, 2001

Shares of STZ continued their pullback from last week and pierced our stop of $65 on Monday. Although no news was responsible for the fall, investors felt that the recent advance was a good enough reason to part with their shares. We feel that STZ will continue to provide plenty of future opportunities, so we’ll keep you informed as play opportunity develop.

Picked on January 28th @ $66.56
Profit/Loss = -1.56 (-5%) (Stopped Monday @ $65.00)
Best Profit = +2.04 (+3%)

February 4, 2001

A recent string of noteworthy acquisitions has helped to brighten earnings prospects at Constellation Brands. This in turn has led the company to improved profits margins and better manufacturing efficiencies. On Friday, STZ shares gave investors their first real pullback in two-weeks of steady gains. Volume did come in strong at 250,100 shares, however the intraday chart shows that a majority of these trades came from a late day rally off the low of $66.75. This tells us that traders are still trying to pick up shares on a pullback, before the stock turns up again. This is good news. So, keeping this in mind, we’ll expect STZ to face initial resistance at the $70 mark. On the other hand, should shares pullback prior to advancing; we can expect solid support to be provided by the 10-dma of $66.27. Our stop resides just below this level at $65, so be careful with entries and remember to confirm reversals at the 10-dma with good mid-day volume of 50,000 or better. With earnings still in the distance (4/5/01), we’ll use support and resistance to time our buys/sells.

Picked on January 28th @ $66.56
Change since picked +0.84
Stop Loss @ $65.00