1. Constellation Brands, Inc. (NYSE:STZ)
Number of Hedge Fund Investors in Q1 2024: 47
Constellation Brands, Inc. (NYSE:STZ) is another diversified alcohol company that operates in the beer, wine, and spirits markets. This provides it a diversified market which allows it to play either the beer or the spirits market depending on the broader conditions. At the same time, even though beer is being outpaced by spirits overall in growth, Constellation Brands, Inc. (NYSE:STZ)’s beer division has been the star of its show and has led the stock to hedge losses this year since it is down just 2% year to date. This is mostly due to Constellation Brands, Inc. (NYSE:STZ)’s beer depletions (units sold to customers at the retail end of the supply chain) stood at 6.4% during its June quarter, which outpaced analyst estimates of 6%. This metric is key for sizeable companies like Constellation Brands, Inc. (NYSE:STZ), since it indicates their supply chain flow and the ability to ship products to consumers instead of having them sit on shelves. Spirits and wines typically struggle in an inflationary environment, and Constellation Brands, Inc. (NYSE:STZ) benefits from diversity with investor focus on beers during a slow economy and vice versa.
Constellation Brands, Inc. (NYSE:STZ)’s management commented on its beer business during the Q1 2025 earnings call:
“Our Beer business grew shipments by 7.6% in Q1 on a reported basis, while depletions were up 6.4% excluding the impact of the craft brand divestitures in June of last year. It is important to reiterate that this mid to high-single digit level of volume growth was fully aligned with the expectations we shared for our fiscal year, as well as our medium-term algorithm. So, despite the volatility of short-term scanner data, be it due to weather, timing of holidays or other non-structural factors or the performance of the broader beer category, be that due to dynamics affecting other brands or segments, our Beer team once again consistently delivered on our targets and objectives. Now honing in on the performance of our largest brands, Modelo Especial grew depletions by nearly 11% and upheld its position as the top share gainer, extending its lead as the number one beer brand in U.S. tracked channels.
Importantly, Modelo Especial also continues to grow household penetration, rising to become the number three brand on this metric at the end of May, with a 2.4 percentage point increase on a 52 week basis. While Corona Extra depletions declined just over 1% in Q1, we continue to expect, we can deliver low-single digit growth from this brand. Importantly, Corona Extra remains a top five beer brand in the U.S. and it continues to gain share in the category. Pacifico delivered remarkable depletion growth of over 20% and was the number four dollar share gainer across the total beer category. Our Modelo Chelada brands delivered an increase of more than 5% in depletions and we are excited to continue to build on that momentum in fiscal ’25 with two new flavors, Fresa Picante and Negra con Chile.”
STZ is the most popular alcohol stock with hedge funds as the alcohol market changes. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than STZ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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