Markets will likely remain uncertain for some time. That means daily swings will occur, punctuated with moments of extreme fear or greed. Traders can take advantage of the swings in both directions. And investors can use drops to buy great companies at a fair price.
A great company, such as one with a strong brand and a history of consistent dividend growth, will rarely trade at a great price.
But they’re also usually overpriced, and it takes market fear to knock it down to a fair one.
A combination of a falling share price amid a slight rise in revenues has taken Constellation Brands (STZ) into a fair price range of under 20 times forward earnings.
The winery and distillery giant has a number of well-known brands under its umbrella, and business in the spirits sector tends to hold up well during economic uncertainty. It’s no surprise that the company just beat on its latest earnings report, and hiked its quarterly dividend payment.
Action to take: Shares don’t have a massive yield with a 1.5 percent starting payout. However, dividend growth over time tends to lead to a rising share price over time, which may make for a worthwhile long-term buy at current prices.
For traders, shares have been trending higher in recent weeks, but the trading has been choppy. The July $235 calls, last going for about $6.90, offer mid-double-digit returns in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, and does not intend to trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.