Constellation Brands Inc. reached a deal to sell wine brands including Clos du Bois and Mark West to E. & J. Gallo Winery for $1.7 billion.
Constellation, which produces Corona beer, Cooks California Champagne and Svedka vodka, said Wednesday it would divest about 30 brands, most of which sell for $11 or less at stores, from its portfolio. The spirits maker will also sell production operations in California, New York and Washington in the deal.
We often see perfect quarters trigger big selloffs if the guidance is weak. But STZ management is not worried they are merely being cautious in a time when we have so many geopolitical worries still looming. If they were truly worried they wouldn’t raise dividends or continue buybacks. They simply want to under promise and over deliver.
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Just the same, the zone above this morning’s pop is also important. It is a prior pivot point that dates back two years. So these are resistance on the way back up. So the Constellation stock bulls have work to do. Breaking through $188 area will not be easy but if management can continue to deliver strong results it will be doable.