The company has benefited from acquisitions during the rally, and it now has a huge brand inventory of beers, spirits and wines, including Corona, Robert Mondavi, Ruffino, and Svedka vodka. Its momentum, however, could be hurt by sobering slow global economic growth.
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Constellation is scheduled to report its quarterly earnings before the opening bell on Thursday, and analysts expect the company to post earnings of $1.15 per share. Constellation is based in the U.S., and its earnings may have been hurt by the strong dollar as sales in countries such as Italy and New Zealand result in lower dollars on the balance sheet at home.
The company has beaten earnings estimates in each of the last four quarters. Each time the stock rebounded, but the last two post-earnings rallies were reversed. That's a sign of a popping "booze bubble." Most notably, the stock set an all-time high on July 2 following its last quarterly report, and the shares have been consolidating since then.
Let's take a look at the daily chart for Constellation Brands.
Courtesy of MetaStock Xenith
At the lower left of the daily graph Constellation Brands ($86.35) held its 200-day simple moving average (green line), which was then at $30.02. The stock has been tracking the rise of its 50-day SMA since June 2013 as the booze bubble inflated.
Post-earnings share price volatility is clearly shown. There was a huge price gap to the upside from $69.93 on Jan. 7 to $81.56 (up 17%) on Jan. 14, following the earnings beat on Jan. 8.