When they have great quarters and they sell off, here's what you do: Wait a few days and start buying.
That's how I feel right now about Domino's (DPZ) and Constellation (STZ). Both had quarters that were sharply better than expected. Both guided up nicely. Both show no sign of peaking whatsoever. And yet both got hammered. Their crime? They ran up in anticipation of their quarters. The run-ups were so stark that you almost had to believe they would sell off. Once they start selling off, though, things become self-fulfilling and people believe the worst, that there must be something really wrong going on here.
Constellation is typical. It's been shooting the lights out ever since the Justice Department essentially gave it the U.S. rights to Modelo and Corona two years ago. That's been a double-digit home run and, frankly, I thought this quarter demonstrated particular beer strength vs. the other manufacturers.
Domino's delivered -- sorry, had to -- an amazing quarter with the same consistent strength we have come to be used to in the U.S. -- low double-digit gains -- but I especially like the trend and growth overseas as other countries adopt the technology that Domino's has pioneered here. The re-imaging of the stores is causing earnings to accelerate nicely.
Again, both of these two companies saw their shares clobbered but both are mounting a comeback. I would get on board before people realize that there was nothing wrong at all and plenty right, and the stocks begin to take out their all-time highs as they have so often done after selling off on the good news.