Retirement Stock Portfolio: 10 Consumer Stocks To Buy

8. Constellation Brands, Inc. (NYSE:STZ)

Dividend Yield: 1.69%

Number of Hedge Fund Holders: 36

Constellation Brands, Inc. (NYSE:STZ) is a prominent producer and marketer of beer, wine, and spirits, renowned for its portfolio of premium imported beer brands such as Corona Extra, Modelo Especial, and the Modelo Cheladas series.

In its second-quarter fiscal 2025 results, the company reported adjusted earnings of $4.32 per share, marking a 14% year-over-year increase and surpassing analysts’ expectations of $4.08. Net sales reached $2.9 billion, a 2.9% increase from the prior year, though slightly below the consensus estimate of $2.95 billion. While management acknowledged ongoing macroeconomic pressures affecting the beverage and alcohol market, it also highlighted the strength of the Beer Business segment, which accounts for over 80% of revenues. This segment experienced a 6% increase in net sales, driven by a 4.6% growth in shipment volumes.

On October 15, BMO Capital adjusted its price target for Constellation Brands, Inc. (NYSE:STZ) to $305 from $315 while maintaining an Outperform rating. The revision followed the company’s Q2 earnings report and discussions with Investor Relations. Despite the reduced target, BMO remains confident in Constellation’s strong beer business fundamentals, expecting further improvements in beer margins to bolster the company’s financial performance.

Coho Relative Value Equity Strategy stated the following regarding Constellation Brands, Inc. (NYSE:STZ) in its Q2 2024 investor letter:

“We also eliminated Conagra (CAG) in favor of a better risk/return for Constellation Brands, Inc. (NYSE:STZ). We are encouraged by the Constellation Board’s decision to eliminate the dual voting share class and reprioritize capital allocation away from acquisitions and towards returns to shareholders. With capital spending expected to decline and leverage near the company’s target, more cash flow should be available for shareholders. STZ is now focused on the higher growth and the higher margin premium beer category, which they dominate with Corona Extra, Modelo Especial and Pacifico. Additionally, the Wine and Spirits business, which has been disappointing is no longer a meaningful part of STZ’s business as it now accounts for less than 10% of overall earnings. We expect STZ to deliver low double-digit growth in both earnings and dividends for many years to come, which is consistent with the Board’s recent approval of a 13.5% dividend hike.”