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Consider This Play on Constellation Brands

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The stock is trading near its 52-week high of 34.65, up about 91% from the 52-week low.

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MINYANVILLE ORIGINAL Constellation Brands (NYSE:STZ) is a wine company and a marketer of imported beer, including brands like Modelo and Corona. The stock is flat today, although it has traded with a $0.60 range only an hour after the opening bell. The stock is trading near its 52-week high of 34.65, up about 91% from the 52-week low of $17.95. Constellation's market cap is 6.08 billion.

Constellation has beat the last four out of five earnings. In both 2011 and 2012 earnings were better than analysts expected. Revenue has beaten estimates for the last three out five quarters, however the last two out of three were lower than estimated. Annual revenues dropped around 18% from 2011 to 2012 but it is estimated to continue growing $100 million per year into 2015.

Date PreEarn PostEarn Change
06/29/12 $21.76 $27.06 $+5.30 (24.4%)
04/05/12 $24.69 $21.61 $-3.08 (-12.5%)
01/05/12 $20.44 $19.73 $-0.71 (-3.5%)
10/06/11 $18.72 $20.40 $+1.68 (9.0%)
Average Magnitude of Post Earnings Return 12.3%

The largest open interest position is in the Apr-13 32.5 Call, followed by the Nov 27.5 Put and the Nov 30.0 Call.

The Oct ATM Strangle is implying a 9.3% move.

My trade: Buy STZ Oct 32.50 - 35.00 Call Spread for $1.40

My risk: $1.40

My reward: $1.10

My breakeven: $33.90

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No positions in stocks mentioned.
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