Constellation Brands, Inc. (STZ) owns many brands of wines, spirits and beers, including the popular Corona and Modelo franchises. The better-established beer giant Anheuser Busch InBev SA/NV (BUD) has fallen flat despite the "Dilly Dilly" campaign. It seems like the key again this quarter is beer over wine and spirits. Constellation Brands stock closed Wednesday, June 27, at $229.41, up just 0.4% year to date and up 12.1% since setting its 2018 low of $204.60 on Feb. 9. The stock is 3% below its all-time intraday high of $236.62 set on April 30.
Analysts expect Constellation Brands to report earnings per share of $2.42 to $2.53 when the company releases results before the opening bell on Friday, June 29. Can demand for iconic brands Modelo and Corona remain a head above the competition? Beer must lead, as sales of wine and spirits have been slowing in recent quarters. A drag could be increasing marketing spending related to the launch of Corona Premier. (See also: Top 4 Beer Stocks for 2018.)
The daily chart for Constellation Brands
Constellation Brands has been above a "golden cross" since April 17, 2017, when the stock closed at $170.12. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving and indicates that higher prices lie ahead. This signal has been in play when the stock traded to its all-time intraday high of $236.62 on April 30. There are three horizontal lines on the graph. My annual value level of $206.21 held at the Feb. 9 low of $204.60. On a negative reaction to earnings, my weekly value level is $215.72. My quarterly pivot at $232.21 is at the top of the chart.
The weekly chart for Constellation Brands
The weekly chart for Constellation Brands is positive, with the stock above its five-week modified moving average of $227.11. The stock is well above its 200-week simple moving average of $158.75, which is the "reversion to the mean," last tested during the week of June 15, 2012, when the average was $11.67. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 62.03 this week, up from 55.03 on June 22.
Given these charts and analysis, investors should buy Constellation Brands shares on weakness to my weekly and annual value levels of $215.72 and $206.21, respectively, and reduce holdings on sell strength to my monthly and semiannual risky levels of $232.21 and $243.92, respectively. (For more, see: 8 Stocks to Outperform a 'Rolling Bear Market'.)