Shortly after the opening bell, we will be buying 25 shares of Constellation Brands at roughly $241.06. Following the trade, Jim Cramer’s Charitable Trust will own 400 shares of STZ, increasing its weighting to 2.75% from 2.58%. We are buying some shares of Constellation Bands now that we are no longer restricted from trading the beer maker’s stock. Shares are down roughly 6% since the company reported a mixed quarter earlier this month, which prompted a couple of analysts to downgrade their rating on Constellation to hold from buy. Still, we defended the stock in the low $240s for four main reasons: its discounted price-to-earnings multiple, strong beer margins, some green shoots in the struggling wine-and-spirits business, and a forthcoming free cash flow uplift as capital expenditures fall. The company’s capacity for cash return to shareholders started to improve last quarter, evidenced by the $250 million spent on share repurchases. Sure, growth in its Mexican beer business took a bit of a hit in the quarter, but some of the blame was due to the broader economic environment and the recent rise in Hispanic unemployment rates. We thought the September nonfarm payroll report, which showed the Hispanic unemployment rate falling to 5.1% from 5.5% in August, was a positive sign of the future. Hispanic consumers are fiercely loyal to Modelo and Corona . Plus, management is feeding its brands by stepping up its marketing investment, which should pay off in the long run. (Jim Cramer’s Charitable Trust is long STZ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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