Are you ready to ring in the new year? I sure am. My wife and I have a bottle of champagne in the fridge and we can't wait to toast 2009.
Normally, we are not big drinkers, but I figured this year would be different. I can't say goodbye to 2008 fast enough. What will go down as one of the worst years in stock market history is plenty reason for us to break out the real stuff.
I suspect we are not alone in our craving for an adult beverage. It is true that during difficult times sales of libations increase. There is good reason for that, as many seek to escape, even for a moment, the challenges faced on a day-to-day basis.
Jobs have been lost, asset values collapsed and incomes are stagnating. It really is enough to drive one to drink. Which got me thinking about whether or not there is an investment play here.
The answer is yes. Recently I wrote about Constellation Brands (NYSE: STZ) from a corporate bond perspective. What about STZ as an equity play? Given that there are plenty of reasons for spirit sales to increase, it would seem like STZ makes sense for any stock portfolio.
Constellation has a wide variety of brands including Robert Mondavi, Clos du Bois, Corona, St. Pauli Girl, Fleischmann's Vodka, and Black Velvet Canadian Whiskey. The company is one of the largest wine, beer and spirit companies in the world.
Like most companies in 2008, STZ lost a significant amount of value, mostly during the credit crisis that gripped the market in the fall. Shares of STZ had been trading around $23 per share for much of the year before the bottom fell out.
When all was said and done, the stock lost nearly half of its value to trade for $10.66 at its bottom.
That selling was quite irrational given the business of the company. If there is any place to hide during a recession it should be in a company like STZ. Alas, that was not the case.
Astute investors finally recognized the over-selling in STZ and pushed shares nicely off the lows. Today you can buy STZ for just under $16 per share.
That makes a bit more sense to me, as I would classify STZ as a safe haven: a defensive stock. That means the stock should do well or at least hold its value during periods of difficult economic times.
The only thing to worry about is a debt load that was built up for acquisitions.
In early December, the company announced that it had profited from foreign currency hedges. STZ will use the proceeds from those hedges to pay down debt. Analysts expect the company to be profitable this year and next.
With shares trading at a discount to its price of just a few months ago, I would view STZ as a buy at this moment.
Jamie Dlugosch is a contributor to InvestorPlace.com.
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