We recently published an article titled Jim Cramer Discussed These 7 Stocks. In this article, we are going to take a look at where Constellation Brands, Inc. (NYSE:STZ) stands against the other stocks Jim Cramer recently discussed.
Jim Cramer, host of Mad Money, recently shared his thoughts on the market’s movements this week, focusing on the economic data that’s shaping the outlook. He highlighted the upcoming nonfarm payroll report on Friday, noting its potential to sway market sentiment. Cramer pointed out that the market has been shaken by the persistently high 10-year treasury bond yields, which refuse to drop.
“Friday’s employment numbers need to show lower wage growth and disappointing hiring. Now that could bring down the yield in the 10-year and therefore make people feel that the Fed will be back on schedule to start cutting the rates again. We gotta get them back into that groove, you know. On the other hand, if hiring and wages remain hot, well then anything good that happens next week could be repealed.”
READ ALSO Jim Cramer Discussed These 10 NASDAQ 100 Stocks Recently and Jim Cramer’s Bold Predictions About These 10 Healthcare Stocks
The labor report is especially critical, according to Cramer, because despite the strength in sectors like autos, housing, and materials, the overall economy may still be running too hot for the Fed to slow it down as needed. He turned his attention to other economic indicators, such as the Purchasing Managers’ Index (PMI), which is offering strong signals of economic activity. Cramer mentioned a recent report, including Monday’s release of the PMI composite index, as an important barometer for the economy.
This data, he explained, provides valuable insights into how the economy is performing across different sectors, with particular attention to manufacturing, which has shown particularly strong performance. In addition to these key reports, Cramer also mentioned the implications of the Job Openings and Labor Turnover Survey (JOLTS), specifically focusing on job openings.
“I’ve been mulling over these job openings numbers and I keep thinking about how President-elect Trump might reverse the high levels of immigration we’ve seen under the Biden administration.”
Cramer warned that mass deportations could create a labor shortage that would drive wages even higher, especially if the country cannot rely on enough workers to fill the gaps. In that case, Cramer mused, “robots may be our only hope,” alluding to the role of automation in addressing potential labor shortages.
“So here’s the bottom line: It’s a light week, but still impactful, accept that people will be on edge ahead of Friday’s employment report. Still, I think you should do some buying if the market gets hammered. As we saw today, it’s not nearly as bad out there as so many think.”
Our Methodology
For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 3. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A winemaker examining a glass of red wine from a barrel in a cellar.
Constellation Brands, Inc. (NYSE:STZ)
Number of Hedge Fund Holders: 36
While Cramer acknowledged that sentiment around alcohol and companies like Constellation Brands, Inc. (NYSE:STZ) is a little negative due to health concerns and more, he mentioned that the stock is worth investing in.
“It’s a bedraggled liquor stock we own for my Charitable Trust that’s been up and down and up and now mostly down. It’s a bit of a jobe stock. Right now, alcohol is under siege by everyone from the Surgeon General this morning for link to cancer to the GLP-1 drugs, which blunt the craving to the, in the case of Constellation, potential tariffs on its Mexican beers, Modelo and Corona, plus an endangered population of drinkers of some significance, the Hispanic immigration cohort that could be hassled or deported by the authorities under Trump.”
Cramer acknowledged the challenges for the company, however, he believes the company is still a solid investment due to its strong cash flow and growth potential. Cramer also speculated that the president-elect might exempt imported beer from tariffs, which could help Constellation. Having recently bought shares for the Charitable Trust, he explained that sometimes enduring tough times is necessary to make a profit.
Cramer said that he expects the company to announce the completion of its Mexican brewery and the end of construction costs, which could lead to a bigger stock buyback.
“On the conference call, we wanna hear that this gigantic brewery that they’re building in Mexico is almost ready and the costs for building it are behind them. That could lead to a voracious buyback much bigger than [the] one they currently have. I know it’s a dicey one and I don’t feel good about it, but what can I tell you? Sometimes you just don’t feel good before you make money.”
Constellation Brands, Inc. (NYSE:STZ) is a leading producer, importer, marketer, and seller of beer, wine, and spirits, offering beer primarily under a variety of brands. At the end of fiscal 2024, the company’s existing facilities in Mexico had a production capacity of approximately 48 million hectoliters. It plans to allocate approximately $3 billion in capital expenditures from fiscal 2025 through fiscal 2028 to continue expanding its operations.
The company raised the lower end of its full-year comparable EPS outlook, which now stands at a range of $13.60 to $13.80. It expects enterprise net sales to grow between 4% and 6% for fiscal 2025, with enterprise comparable operating income anticipated to increase by 8% to 9%. However, in its wine and spirits business, the company forecasts declines in both net sales and operating income for the full fiscal year.
Constellation Brands, Inc. (NYSE:STZ) expects a 4% to 6% drop in net sales and a 16% to 18% decrease in operating income due to ongoing operating deleverage and top-line challenges. For fiscal 2025, the company also expects free cash flow to range between $1.4 billion and $1.5 billion, marking the high point of capital expenditures in its beer business medium-term outlook.
Overall STZ ranks 5th on our list of the stocks Jim Cramer recently discussed. While we acknowledge the potential of STZ as an investment, our conviction lies in the belief that 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.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.