We recently published a list of 15 Best Large-Cap Value Stocks to Buy as the Recession Hits. In this article, we are going to take a look at where Constellation Brands, Inc. (NYSE:STZ) stands against other best large-cap value stocks to buy as the recession hits.

Goldman Sachs highlighted that equities around the world traded in and out of a bear market — which is often defined as a 20% decline from the recent peak. According to Peter Oppenheimer, chief global equity strategist at Goldman Sachs Research, the history of bear markets can provide some clues regarding the duration and severity of such downturns. U.S. stocks ended significantly higher after Trump announced his decision to put a 90-day pause on the additional country-specific portion of the reciprocal tariffs. That being said, Oppenheimer believes that a sustained rebound isn’t yet in place. As per the strategist, the valuations are required to adjust further before equities can shift into the “hope” phase of the next cycle.

What to Expect from Current Earnings Season?

With the Q1 2025 earnings season underway, Morningstar informs that investors can expect more focus than usual on what companies want to say regarding their outlooks, while the uncertainty surrounding tariffs means offering weaker, less confident, or even no guidance. Tariffs can impact the corporate bottom lines in several ways, both directly and indirectly. Notably, the increased import costs put more pressure on the margins. While some firms can decide to alleviate the pressure by increasing the prices for customers, others can choose to absorb them, says the firm. Morningstar, while quoting FactSet’s consensus estimates, mentioned that analysts expect 6.8% earnings growth in Q1 for companies in the S&P 500 benchmark index. For the full year, analysts anticipate an 11.2% growth.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

Amidst Tensions, What’s the Silver Lining?

Forward guidance is what generally moves the financial markets. If the firm warns that there can be a possibility to see smaller profits, the stock tends to fall. This might happen across the market, but there is a silver lining. As per Morningstar chief research and investment officer Dan Kemp, it is important to note that most of the value lies in the future. Therefore, the impact on the company’s real value is expected to be muted. According to him, widening of the gap between stock prices and future real values can be a very fertile soil for the market investors.

Christian Mueller-Glissmann, head of asset allocation research within portfolio strategy for Goldman Sachs Research, says that investors need to think about diversifying regionally and across styles. To be specific, this consists of low-volatility stocks, i.e., equities from more defensive sectors, that fluctuate less than the broader market.

Our Methodology

To list the 15 Best Large-Cap Value Stocks to Buy as the Recession Hits, we considered companies from the industries which are expected to be resilient in a recessionary environment, such as utilities, healthcare, and consumer. Next, we chose the stocks that trade at a forward P/E of less than ~20.0x. Finally, the stocks are arranged in ascending order of the hedge fund sentiments, as of Q4 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A winemaker examining a glass of red wine from a barrel in a cellar.

Constellation Brands, Inc. (NYSE:STZ)

Number of Hedge Fund Holders: 51

Forward P/E as of April 15: ~14.04x

Constellation Brands, Inc. (NYSE:STZ) is engaged in producing, importing, marketing, and selling beer, wine, and spirits. Andrew Strelzik from BMO Capital maintained a “Buy” rating on the company’s stock with a price objective of $215.00. The rating is backed by factors demonstrating its strategic positioning and future growth potential. Constellation Brands, Inc. (NYSE:STZ)’s strategic divestiture of mainstream wine brands is regarded as a positive move, which concentrates its portfolio in the premium segment, enhancing growth over time, says the analyst.

On April 9, Constellation Brands, Inc. (NYSE:STZ) announced that it had signed an agreement with The Wine Group to divest primarily mainstream wine brands and related vineyards and facilities from the wine portfolio. Furthermore, the analyst believes that a slower growth in Beer sales is because of broader socioeconomic factors rather than a decline in brand strength. This suggests a potential for growth acceleration as and when the broader consumer environment stabilizes. Moving forward, premium positioning and robust brand equity can enable it to sustain its outperformance. With consumers moving towards premium offerings, Constellation Brands, Inc. (NYSE:STZ)’s portfolio remains well-placed to capture market share and mitigate the category weakness.

Coho Partners, an investment management company, published its Q2 2024 investor letter. Here is what the fund said:

“We also eliminated Conagra (CAG) in favor of a better risk/return for Constellation Brands, Inc. (NYSE:STZ). We are encouraged by the Constellation Board’s decision to eliminate the dual voting share class and reprioritize capital allocation away from acquisitions and towards returns to shareholders. With capital spending expected to decline and leverage near the company’s target, more cash flow should be available for shareholders. STZ is now focused on the higher growth and the higher margin premium beer category, which they dominate with Corona Extra, Modelo Especial and Pacifico. Additionally, the Wine and Spirits business, which has been disappointing is no longer a meaningful part of STZ’s business as it now accounts for less than 10% of overall earnings. We expect STZ to deliver low double-digit growth in both earnings and dividends for many years to come, which is consistent with the Board’s recent approval of a 13.5% dividend hike.”

Overall, STZ ranks 12th on our list of best large-cap value stocks to buy as the recession hits. While we acknowledge the potential of STZ as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than STZ but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.