• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Constellation Brands Could Retest Late May Nadir as Charts Lack Spirit

The producer of alcoholic beverages offers mixed technical signals, though trading volume in the shares has been diminishing this year.
By BRUCE KAMICH
Oct 04, 2019 | 08:49 AM EDT
Stocks quotes in this article: STZ, CGC

On Thursday's "Mad Money" program during the show's Executive Decision segment, Jim Cramer spoke with Bill Newlands, president and CEO of Constellation Brands (STZ) , which had just reported earnings.

"We had a really strong quarter," Newlands said, notwithstanding the stock's 6% selloff on Thursday. He said its core business was solid, with strong growth from Modelo, while Constellation reported its best quarterly margins ever.

So what went wrong? Investors were likely tripped up on a few accounting details, according to Newlands. Because of new accounting rules, Constellation had to show a $484 million equity loss on its Canopy Growth (CGC) holdings. However, keep in mind the company is still up more than $750 million on its stake, Newlands said.

Canopy Growth is the best capitalized cannabis company and current leader in cannabis sales, Newlands said. Plus, it has the regulatory and scientific knowledge to excel in the industry, he said. When cannabis becomes legal in the U.S., Canopy is already well-positioned to dominate that market, too, he noted.

Newlands said he is confident about Constellation's coming Corona seltzer product, launching in March 2020, and he added that tariffs are having little impact on Constellation's business. Let's check the bubbles in the charts and indicators. 

In this daily bar chart of STZ, below, we can see a volatile rise from the January low. Prices recently gapped below the rising 50-day moving average line and are in a position to retest the rising 200-day line. The daily On-Balance-Volume (OBV) line was rising but now looks like it may turn lower. The trend-following Moving Average Convergence Divergence (MACD) oscillator is pointed down and close to a cross of the zero line and a sell signal.  

In this weekly bar chart of STZ, below, we can see a mixed picture. Prices are still in an uptrend and above the rising 40-week moving average line, at least for now. Trading volume has been diminishing this year, which is not the definition of a strong market. Oddly, the On-Balance-Volume (OBV) line has been rising, which is supposed to tell us that buyers of STZ have been more aggressive. The MACD oscillator is close to turning lower and a take profits sell signal.  

In this Point and Figure chart of STZ, below, we can see the recent decline with no gap and we can see a possible downside price target of $172.  

Bottom line strategy: STZ sometimes comes roaring back after a sharp break to the downside, but with a weak or weakening broad market we could see prices decline to their Point and Figure price target of $172.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are prohibited from trading individual securities.

TAGS: Earnings | Investing | Stocks | Technical Analysis | Beverages | Consumer | Food & Drink | Marijuana | Mad Money | Executive Interview | Real Money | Cannabis

More from Stocks

Bearish Bets: 2 Nasdaq Stocks You Should Consider Shorting This Week

Bob Lang
Jan 17, 2021 12:05 PM EST

These names are displaying technical deterioration.

KushCo Sprinkles Some Gems on Its Earnings Call

Debra Borchardt
Jan 17, 2021 8:15 AM EST

The cannabis packaging company is looking at Arizona and New Jersey as new markets for growth.

When it Comes Time to Sell, Will You Act or Will You Freeze?

James "Rev Shark" DePorre
Jan 16, 2021 10:00 AM EST

Why don't more people embrace the ease and power of selling stocks? Why do they freeze and do nothing as losses build?

Hungry Traders and Stock Opportunities Aren't Likely to Go Away Soon

James "Rev Shark" DePorre
Jan 15, 2021 4:40 PM EST

It doesn't take much time for stocks with strong momentum to reset and continue on their way.

At What Price Is Ballard Power Systems a Buy?

Bruce Kamich
Jan 15, 2021 3:09 PM EST

Let's check out the latest charts of BLDP.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    When it's time to sell, will you act or freeze?
  • 08:35 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 1/13/2021

    Lower highs... SPX (Long-Term View) The 1/8/2...
  • 08:07 AM EST GARY BERMAN

    Tuesday Morning Fibocall for 1/12/2021

    Watch if the recent trend of lower highs continues...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login