Corona brewer Constellation is set to grab more prime real estate at stores — driving sales and its stock

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Constellation Brands has an upper hand in a battle for coveted — but shrinking — territory in stores, according to new Wall Street research. It is further evidence that the Mexican beer powerhouse is a worthwhile investment in an otherwise weak category. Constellation's portfolio of beers, anchored by Modelo and Corona, is among the best positioned to gain display space at U.S. retail locations this summer and beyond, Jefferies said in a note to clients Monday. Working in the Club holding's favor is the growing popularity of imported beers and struggles for domestic alternatives. Its other brands include Pacifico and Victoria. The analysts' conclusion is notable because in-store displays — cases of beer stacked in an attention-grabbing way — are important drivers of sales. In fact, displays provide more of a lift to sales than shelf-space gains for brands, Jefferies analysts said. However, retailers have reduced the beer industry's display space by roughly 37% since March 2022, Jefferies said, as mainstream domestic brands proved to be a drag on incremental sales. "This means more competition for less space among competitors," analysts explained. Flavored malt beverages, imports, and non-alcoholic beverages are the only subcategories to see an increase in store display penetration during this period. While Anheuser-Busch InBev and Molson Coors continue to occupy the top two spots, "we expect share losses to continue given less favorable portfolio mix," wrote the analysts. On the other hand, Constellation has a beer portfolio entirely in the growing import category, which is why Jefferies is upbeat about the company's ability to win prominent placement in supermarkets and convenience stores. The analysts have a buy rating on Constellation and a price target of $310 per share, implying nearly 18% upside from Friday's close. Jefferies also identified Boston Beer as a display-space winner thanks to its flavored malt beverages, such as Twisted Tea. STZ 5Y mountain Constellation Brands' stock performance over the past five years. In recent years, Constellation's stock has been a frustrating stock to own — though we've remained upbeat on the long-term promise of its beer business, which has favorable demographic trends in the U.S. on its side. We have a buy-it-here 1 rating on Constellation Brands and a price target of $300, implying about 14% upside from Friday's close. Shares have had a nice move since late May — and last week, the stock posted its best weekly performance since January, advancing almost 4%. Year to date, Constellation is up more than 9%, underperforming the broader S & P 500's gain of slightly more than 14%. Constellation's momentum will be tested next week when the company reports fiscal 2025 first-quarter results. Recent scanner data has shown some weakness due in part to poor weather around Memorial Day, Jefferies analysts told clients in a note earlier this month. Any slowdown is likely to be temporary, though, analysts said. In general, Jim Cramer has expressed concern over a slowdown in consumer spending and wondered whether increased use of GLP-1 weight loss drugs, such as Zepbound from fellow Club name Eli Lilly , could dampen demand for beer. While still early, it appears that beer has not as impacted, and we hope this trend continues. We would also like to see the company return more capital to shareholders, though we recognize the company is in an investment phase in order to expand beer production capacity. "There's no big buyback coming until next year so the cashflow is not being used the way we might expect it," Jim during Monday's Morning Meeting for Investing Club members. Last quarter , management increased its quarterly dividend by 13% to $1.01 per share. The stock's current dividend yield is about 1.5%. Constellation is working with activist investor group Elliott Management, which has a history of bringing out more shareholder value in companies it takes stakes in. While Jim has urged Constellation to concentrate solely on beer and part ways with its struggling wine and spirits business, neither the company nor Elliott has signaled a move in that direction. (Jim Cramer's Charitable Trust is long STZ, LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. Constellation Brands' Corona Light is displayed for sale at a grocery store in New York. Scott Eells | Bloomberg| Getty Images