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A Corona with a lime is the quintessential beer of summertime. Robert Mondavi Wines are perhaps the most popular wines in the United States. Many consumers don't realize that both these iconic brands are owned or distributed by the same company, Constellation Brands (STZ | Quote | Chart | News | PowerRating), our Long Term PowerRated Stock Spotlight this week. This Victor, New York based firm has over 200 brands in its portfolio, had a strong fiscal 2009, and was just upgraded from a 5 to a 6 Long Term PowerRatings.
For those of you unfamiliar with the PowerRatings system, it is an easy to use, dynamic stock picking tool based on 13 years of extensive, statistically significant studies, across most market environments. Our research has clearly shown that stocks that earn a 10 rating have an 81% chance of being higher one year later. Those possessing a 9 rating have a 79.1% chance of trading higher one year later. In this volatile, uncertain market environment, allow Long Term PowerRatings to assist you in building a profitable and safe portfolio.
The building blocks of Constellation Brands were first formed in 1945 by Marvin Sands when he created Canandaigua Industries at the age of 21. The idea was to sell bulk barrel wine to bottlers on the East Coast. The firm was an immediate success with first year gross sales of $150,000.00. Marvin Sands went on an acquisition and creation spree with the funds buying and building up until 1973, when the company went public. The acquisitions and expansion continued with the firm becoming a major global player. In 2000, Canandaigua changed its name to Constellation Brands and by 2001 owns 20 of the top 100 United States wine brands. The company continues to grow organically and via acquisition and has recently divested of several wine brands to focus on the premium market.
Despite a rough economic environment, Constellation Brands turned in strong fiscal 2009 results. Diluted EPS was up 11%, free cash flow hit $378 million and debt was decreased by $820 million. The company is focusing on its premium brands as they return the greatest profits, said the CEO. Organic net sales of spirits increased by 6% with a 50% increase in the premium vodka brand, SVEDKA. They are very positive going into fiscal 2010 expecting to meet or beat 2009 results. Technically, price has double bottomed around $11.00/share and has since bounced above the 50-day SMA. Resistance appears at $12.50 on the chart.
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David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.
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