so guys at the mindblowing age of 94 uh Warren Buffett the CEO of Brookshire hathway is apparently still buying brand new stocks for their portfolio this time in a very interesting play here on the ALK and can markets with a company called constellation Brands secr symbol stz now just so you know unfortunately I do have to say things like Al or can so that I don't get demonetized here on YouTube but I know that you guys are smart enough to know what I'm referring to I just want to apologize for the inconvenience of that all but uh yeah let's go ahead and take a closer look at this pickup here by Buffett constellation like I said it's a very interesting company it's actually one that I got very close to buying the stock myself a few years ago but I ended up never pulling the trigger on it and I'm kind of happy I didn't because the stock ended up crashing uh later on so it's just making it even more interesting I'm actually very curious to this update here take a look at everything that's been going on with the company what has happened since I want to take a look at the business the stock and of course I'll let you know if I would consider buying the stock right now myself too uh now that it has fallen by a lot and we know that the great Warren Buffett is a big investor in the company too so it's very interesting now let's go ahead and take a closer look so um I actually first saw this pop up here among Buffett's largest purchases last quarter the most recent information available to us from the SEC and and there are actually other stocks that he's been buying too like Domino's pool Corp Sirius XM accidental uh as well rounding out the five largest purchases however all of those were increases to already existing positions whereas constellation was a brand new pickup which at first glance you know it might not seem like a huge amount there since it only makes up less than a half of 1% of the entire portfolio however because Berkshire is so insanely large that was actually a purchase of more than $1.2 billion which is actually you know pretty Jack gigantic you know most conglomerates or even hedge funds uh May slowly increase a position over time but for any of them to just drop like over a billion dollars in a single quarter like that on just one stock yeah that's a very bullish move there in fact two other stocks on the list Domino's and pool Corp were brand new additions the quarter before four and yet in the span of the last two quarters neither one of them is even worth more than a billion dollars yet and even if you combine them combine the two stocks they still are not even worth as much as constellation already is for Buffett so again it was actually a very large purchase in the stock and a very kind of bullish signal on it too now here's where things get really interesting though because if you look at uh the average Buy price section uh on this page here well you can see that the average price during that time was almost $240 meaning that the stock has actually crashed by over 30% since Buffett was buying it now we don't know exactly how accurate that is because all the actual buy prices don't have to be disclosed to the SEC so this is just like an average estimate from around that time but with that big of a discrepancy there we know that Buffett very likely went into this new year being heavily down on this position so far which if he sticks to his motto of you know being greedy when others are fearful and how he always preaches to buy stocks when they're low or when they're going down well then he should actually be buying even more of the stock this year and that actually makes this a stock here that is even more interesting to look at now for that reason now when we look at the charts here what we can see that big fall in price very clearly at the end of this 10-year chart here was a giant crash of close to 40% from the top most of which again has happened after Buffett initially bought in CU if we switch over to a year-to date view well we can see that so far it's lost almost a quarter of its entire value in just these first couple months alone big drop there so look now that we know about the purchase from Buffett and we know that the stock price has actually Fallen by even more since then well let's take a look at the business now to see if it if this is a stock that is worth picking up for our own portfolios too given the drop and then we got to consider the business performance so let's take a look at it well if you've never heard of this company they are mostly an ALK company that either owns or holds marketing and distribution rights for some of the most popular brands out there including Corona Modello Pacifico and more particularly in North America because I think anheiser Bush owns some of those rights overseas but on top of just beers they also Market other drinks like wines and spirits while also owning a large stake in the can producer canopy growth now with canopy it gets a little tricky cuz they originally spent $4 billion investing in that company where they then partnered on can infused drinks which was something that you know kind of everyone thought would be a huge success and and even me too I thought that that would be a high growth market and something that you know looking forward into now like in 2025 I thought we'd see can infused drinks everywhere but that hasn't really been the case and overall the can Market itself got a bit oversaturated with so many players too that many can stocks actually ended up crashing into the ground in fact canopy growth themselves have now lost just about all of their value from the top dropping from a high of over $400 a share during the pandemic to now only being worth less than $2 I mean man what a crazy ride that the whole can Market has been it's pretty incredible anyway because of these letdowns well constellation ultimately decided to start distancing themselves from canopy growth by convert converting their shares giving up board seats and even voting right to now I believe that they do still own about a quarter of the company don't quote me on that it's just something that I saw from doing some Google searches it could be outdated could be wrong plus you know with all the distancing that they've been doing I wouldn't be surprised if they've actually sold some of that stock since then too but as it stands you know it is something that perhaps they own around a quarter of canopy growth I think that's the most reliable information we have but primarily this is going to be a company that just relies here on beer for the most part and then to a smaller extent some other drinks like wine and then to an even smaller extent than that a Stak in canopy growth a St you know some exposure to can which may even become non-existent in the future uh if they continue to kind of distance themselves from that but that's more so speculation anyway the Beer Market alone is actually very lucrative for constellation especially given the downfall of Bud Light and all the controversies that they've faced in recent years where Modelo has actually risen to now become the number one most popular beer in America because of it and that's a feat that they've actually never achieved before in history now going forward anheiser Bush and molon Kors they still have more overall market share in America it's hard to find exact figures on this but for example I just uh you know pulled up some figures here constellation did around 10 billion in total sales uh over the past year while anheiser Bush did over 15 billion just in North America alone so you know there is a discrepancy there but uh overall you're probably talking about like a triopoly happening in America consisting of ab Kors and constellation which again the AL Market is very large it's a very resilient one sometimes even going up during economic downturns and so that's resulted in pretty strong financials for constellation over the years with sales consistently growing every quarter and even EPS Prof it's expected to break new record highs in the next couple years too however that growth is actually pretty small you're typically looking at just around a mid singled digit growth rate at best for their sales the reason for that is because there's not really anything new or fresh to look forward to in fact one of the main reasons why I actually considered you know buying the stock several years back was because of their future growth potential in the can Market CU with that you know you would have essentially a very large and wellestablished dominant business in the ALK Market but with also the future growth potential the speculation kind of part of it in the can Market too but unfortunately that hasn't really panned out and so now you're mostly just left with that reliable but relatively stagnant um you know ALK business that constellation has and yet Warren Buffett seems to think that it's still a great stock to own and here's why it's the combination of really that reliable business coupled with a dividend that is yielding about 2.4% with an excellent payout ratio of less than 30% meaning it's very safe to collect longterm and you also get a dirt cheap valuation at a forward PE and PEG ratio that are over 20% and 30% cheaper than the sector respectively despite this being a leader in a very resilient market and so that total package as a whole is actually very attractive and that's you know something that Warren Buffett typically looks for himself in most of his stocks right they tend to be kind of boring low growth companies but value he he always kind of a lot of times he wants a dividend a lot of times he just wants that low valuation a falling stock price things like that some turnaround potential so uh and again all of that together as a package it is actually very attractive because of the stable financials and business that they have however you might be wondering well why then has the stock actually gone down to that dirt cheap valuation I mean it doesn't seem like the business is struggling enough to Warrant that well I can tell you with pretty good certainty that it's a combination of three things that really drag this stock down number one the can investments just not panning out well for them it's kind of hurting their growth potential in the future and Wall Street always wants to see that future potential right number two a recent earnings report uh didn't really impress Wall Street they missed on on uh some analyst estimat and then they also gave lower guidance than Wall Street wanted to see and number three uh much of the poor performance including that weaker guidance is really stemming from both inflation and the threat of new tariffs uh the ones being essentially threatened by the new president Trump now when looking at those tariffs for example it actually correlates almost perfectly with the recent crash in the stock price Trump won the election around the end of last year well it's almost entirely when the stock price really started to to crash and it's been falling ever since a big reason why is because Trump was stranding tariffs of as much as 25% on Mexican Imports now why does that matter well most of constellation constellation's brands are actually made in Mexico like Corona and Modello and then they're imported into the United States so imagine with all that crazy high inflation that we've already had and on top of that you add on another 25% to any Mexican beers coming in well you just know consumers would likely pull back from them and likely start buying some domestic beers to at least some degree right I mean it's probably not going to kill them Modelo and Corona are very strong Brands a lot of people are still going to buy them but it would have a major impact in fact the CEO himself talked about inflation in their last latest earnings report saying that they're already seen clear evidence from consumers and signs uh that they're choosing cheaper options whenever possible because of inflation so you know you tack on another 25% yeah that would be very harmful and that's why we seen the stock crash accordingly having said that though after Trump threatened Mexico with those tariffs their president spoke to Trump and agreed to secure the Mexican border for which Trump delayed the tariffs for another month and to my knowledge the most recent information I have uh nothing has really escalated since then I I think the most recent news on tariffs is that Trump wants to do reciprocal tariffs and is already looking to implement a 25% tariff on cars Pharmaceuticals and chips but obviously none of that includes beers so theoretically you know constellation should be fine at least for now and realistically you know I don't think it's something that either side really wants terms of the US and Mexico so so Buffett is likely betting here that there will be resolutions to come with Mexico mostly giving in and agreeing to certain terms but we'll have to wait and see how that plays out it's mostly speculation of the future now in the meantime though I just think Buffett looks at this stock as as if it's a buy it's falling by even more and I wouldn't be surprised if he continues to add to the position here obviously in his 90s there's unfortunately not going to be a whole lot for him to look forward to in terms of really long-term gains but I suspect that this is much more of a long-term play that he just kind of wants to uh put this into the Burkshire portfolio for their future success kind of focusing on the company rather than his own personal gains and he just kind of wants to leave more value behind so I think maybe that's why he went with a stock like constellation because long term I do actually think constellation has a very strong business and the stock will probably rebound I mean I I can't imagine that it would continue to fall by too much I mean it's already fallen quite a bit by the way Wall Street also agrees with him 19 analysts over the next year have targets much higher than where the stock sits today with even the lowest estimate being a 10% rise the average being a 45% rise and the highest being almost an 80% rise now as for me it's very tempting to get in at these levels especially as a value play on a long-term recovery here if I was looking specifically for that I would actually start buying right now however I already own several stocks like that and I can't own every stock in the market I'm a little more interested at the moment for some growth and some dividends which constellation is severely lacking in too low growth too small of a dividend to really get me too excited but if it keeps falling like this I might not be able to resist much longer and we'll probably have to start buying some shares because like I said it is looking pretty attractive at these levels but hey those are just my thoughts I would love to hear what you all have to say Down Below in the comment section let me know your thoughts hope you enjoyed the video hope you enjoyed this quick up date and uh I will catch you in the next one my friends take care everybody bye-bye [Music]