Jim Cramer’s Charitable Trust is planning to buy 25 shares of Constellation Brands at around $241.06 per share. This purchase will increase the Trust’s ownership of STZ to 400 shares, bringing its weighting up to 2.75% from 2.58%. Despite a recent 6% drop in shares following a mixed earnings report, Jim Cramer is confident in Constellation Brands for several reasons. These include a discounted price-to-earnings multiple, strong beer margins, signs of improvement in the wine-and-spirits business, and upcoming free cash flow growth as capital expenditures decrease. The company has also shown a commitment to returning cash to shareholders through share repurchases.
While the company’s Mexican beer business experienced some challenges in the previous quarter, including broader economic factors and rising Hispanic unemployment rates, there are positive signs for the future. The Hispanic unemployment rate fell to 5.1% in September, indicating a potentially brighter outlook for Constellation’s brands like Modelo and Corona, which have strong loyalty among Hispanic consumers. Management is also increasing marketing investments to support the growth of their brands in the long term, which should benefit the company moving forward.
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Overall, the decision to buy shares of Constellation Brands reflects Jim Cramer’s confidence in the company’s future prospects. Despite recent challenges, such as a decline in the stock price and issues in the Mexican beer business, there are positive indicators for growth and success. By focusing on factors like discounted valuation, strong margins, and marketing investments, Constellation Brands is positioned to continue returning value to shareholders and maintaining its position in the market. Subscribers to the CNBC Investing Club can benefit from the insights and trade alerts provided by Jim Cramer to make informed investment decisions within their own portfolios.
