Group 1: Market Trends - The consumer staples sector has seen a rotation into defensive sectors, with consumer staples (0.71%), real estate (1.16%), and healthcare (3.16%) leading the market in the past week [1] - Inflows into defensive sectors may indicate the strength of the current market rally, suggesting it spans all sectors [2] Group 2: Constellation Brands Overview - Constellation Brands, a global alcoholic beverage producer, has seen significant investment from Berkshire Hathaway, which increased its stake to 13.4 million shares valued at $2.210 billion [3][7] - The global alcoholic beverage industry was valued at $1.762 billion in 2024 and is projected to reach $3.015 trillion by 2030, with a CAGR of 9.7% [5] Group 3: Financial Performance - Constellation Brands reported a consolidated net income of $523.8 million for FY 2026 Q1, a significant improvement from a loss of $370.6 million in Q4 2025 [11] - The company's free cash flow increased from $879.7 million in FY 2018 to $1.973 billion in FY 2025, representing a growth of 124.28% [11] Group 4: Stock Performance and Valuation - Constellation Brands' stock is currently trading at a forward P/E multiple of 13.00, indicating it is undervalued [12] - The stock has potential upside of 18.29% in the near term, with a 12-month price target of $213.74, nearly 30% higher than its current trading price [15]

Core Viewpoint - Constellation Brands and Altria are both considered stable blue chip stocks, but Altria has outperformed Constellation significantly over the past three years, raising questions about future investment potential [1][2]. Constellation Brands - Constellation Brands generates most of its revenue from its beer business, with popular brands like Modelo and Corona, and a smaller portion from wine and spirits [4]. - The company faces three major challenges: declining beer consumption among younger consumers, decreasing sales of lower-end wines, and increased costs due to tariffs on imported Mexican beers [5][6]. - Analysts expect Constellation's revenue to decline from $10.2 billion in 2024 to $9.9 billion in 2027, while its earnings per share (EPS) is projected to grow at a compound annual growth rate (CAGR) of 7% [8]. - Despite a low valuation at 14 times forward earnings and a forward yield of 2.5%, the lack of near-term catalysts makes it an unappealing investment [9]. Altria - Altria primarily generates revenue from its Marlboro cigarettes and has a strong domestic focus, which protects it from tariffs and foreign-exchange issues [10][11]. - The company has been countering declining smoking rates by raising cigarette prices, cutting costs, and expanding its smokeless product portfolio through investments and acquisitions [12]. - Following a setback with its investment in Juul, Altria acquired Njoy for $2.8 billion in 2023, which is expected to boost EPS starting in 2026 [13]. - Analysts predict Altria's revenue will dip slightly from $20.4 billion in 2024 to $20.2 billion in 2027, but its EPS is expected to grow at a steady CAGR of 5% from 2025 to 2027 [14][15]. - Altria's stock is considered cheap at 12 times forward earnings, with a substantial forward yield of nearly 7%, making it a more stable investment compared to Constellation [15]. Investment Recommendation - Altria is viewed as the better investment option due to its more stable business model, larger dividend, and lower valuation multiple compared to Constellation Brands [16].

Group 1 - Berkshire Hathaway has more than doubled its stake in Constellation Brands, increasing its holdings from 5.6 million shares to approximately 12 million shares, representing a 6.6% ownership in the company [1][2][4] - The company has sold its holdings in Citigroup and Brazilian fintech lender Nu Holdings as part of its portfolio adjustments [1][2] - The quarterly disclosures do not specify whether individual trades were made by Warren Buffett, portfolio managers Todd Combs and Ted Weschler, or future CEO Greg Abel [3]