Constellation Brands (STZ)...Recession/defensive? Or Growth?
A quick read of analyst reports on STZ will leave one with mostly bullish soundbites such as 'recession proof', 'premium brands', 'high margins', 'strong cashflow', etc. All true! It does seem to be that even in a recession, people are not only loath to limit their drinking, but in fact, they tend to drink more! So, enter STZ with its premium brands and marketing and branding prowess.
The fundamentals certainly lean towards 'buy'. BUT, an equally quick look at the chart leaves one with some pause. The RSI has been a reasonably good indicator of tradable highs and lows, most recently hitting an 'overbought' level. Add to that, any hint by Powell that the pace of rate hikes will slow, is likely to see money migrate from the so-called recession-proof stocks back into some of the bloodied tech and growth names. If that were to happen, to me, it would represent a buying opportunity for STZ. I'm no so sure that viewing STZ as a cash-cow, defensive, recession play is all that accurate. In fact, their premium brands and diversification into new categories could re-label them into more of a 'growth' stock than most people think.
Currently flat...but on the lookout for a pullback.
Eager to hear other opinions.
(NOTE: THIS IS NOT ADVICE IN ANYWAY! JUST FOOD FOR THOUGHT AND DISCUSSION!!)
The fundamentals certainly lean towards 'buy'. BUT, an equally quick look at the chart leaves one with some pause. The RSI has been a reasonably good indicator of tradable highs and lows, most recently hitting an 'overbought' level. Add to that, any hint by Powell that the pace of rate hikes will slow, is likely to see money migrate from the so-called recession-proof stocks back into some of the bloodied tech and growth names. If that were to happen, to me, it would represent a buying opportunity for STZ. I'm no so sure that viewing STZ as a cash-cow, defensive, recession play is all that accurate. In fact, their premium brands and diversification into new categories could re-label them into more of a 'growth' stock than most people think.
Currently flat...but on the lookout for a pullback.
Eager to hear other opinions.
(NOTE: THIS IS NOT ADVICE IN ANYWAY! JUST FOOD FOR THOUGHT AND DISCUSSION!!)