Profit Pregame

Why Constellation’s Legal Troubles Could Be Great News for You

Last month, I talked about the advent of alcoholic seltzers and the huge impact they are having in the beverages space.

Specifically, I mentioned Constellation Brands, Inc. (STZ) as my favorite investment to capitalize on the growing trend.

Recently, Constellation has landed itself in some legal trouble over one of its popular seltzer brands, Corona Hard Seltzer.

Back in 2013, AB InBev (BUD) – owner of the Corona brand – agreed to sell the rights to produce the Corona brand in the U.S. to Constellation. But InBev is claiming that the agreement only extended to beer, not hard seltzer.

InBev filed suit last week after it failed to come to a settlement with Constellation.

Shares of STZ fell sharply as a result – from highs of over $241 per share to just under $224.

While I’m not about to speculate on what the outcome of the suit may be, I will say that last week’s sell-off could be providing a great buying opportunity with excellent timing.

I think Constellation will continue to outperform with demand set to increase in a big way as more bars and restaurants are able to reopen their doors.

Plus, the potential for improving cannabis legislation has Constellation’s holdings of Canopy Growth Corp. (CGC) soaring.

Now could be a great time to pick up STZ shares or add to your position.

Trading tip of the week

The hedge funds always win.

That is why we are consistently watching their trades, because they have access to information that we do not have.

The GME saga continues and I truly believe that Robinhood, Citadel, and the hedge funds limited traders to selling GME stock, thus pushing the price lower.

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Earnings report to watch

Etsy, Inc. (ETSY) is another great example of a company that has thrived under the conditions created by COVID-19.

The need to avoid public places triggered a massive shift towards online shopping over the last year. And Etsy was there to help facilitate an influx not only of buyers, but also sellers of the unique, personalized products that the company is known for.

Etsy is also one of the largest companies to accept Bitcoin, making it an attractive place for investors to spend their profits as Bitcoin reaches new highs.

I like Etsy’s prospects for continued growth, even as things start to return to “normal.”

I’m very interested to see what this well-run e-commerce giant will report on Thursday after the close.

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