Starting a 2% position in Constellation Brands (STZ) #researchtrades

We are recommending buying a 2% position in STZ (Constellation Brands), funding from cash.

Investment thesis:

· Adding STZ helps position our portfolio to be more defensive at this stage of the economic cycle

· STZ is down ~20% YTD, giving us a good entry point

· STZ continues to have HSD top line growth and high margins that should incrementally improve going forward

· STZ comes out of a heavy capex investment cycle to support its growth: FCF margins are set to inflect thanks to lower capex

Company description:

$35B market cap, $8B in sales, $1.2B in FCF

STZ owns the fastest growing beer portfolio in the US and is the #1 multi-category alcoholic beverages supplier in the US

The firm generates over 97% of its revenue in the U.S.

100 brands including:

v Imported beer: Corona, Modelo, Pacifico: owns the rights to distribute in the US

v Craft beer: Ballast Point

v Wine: Robert Mondavi, Black Box, Clos du Bois

v Spirits: Svedka

Julie S. Praline

Director, Equity Analyst

Direct: 617.226.0025

Fax: 617.523.8118

Crestwood Advisors

One Liberty Square

Suite 500

Boston, MA 02109

www.crestwoodadvisors.com

STZ presentation – CRESTWOOD.pptx