Investing isn't easy. Even Warren Buffett counsels that most investors should invest in a low-cost index like the S&P 500. That way, "you'll be buying into a wonderful industry, which in effect is all of American industry," he says.
But there are, of course, companies whose long-term fortunes differ substantially from the index. In this series, we look at how individual stocks have performed against the broad S&P 500.
Step on up, Constellation Brands (NYSE: STZ ) .
Constellation Brands shares have easily outperformed the S&P 500 over the last quarter-century:
Since 1987, shares have returned an average of 11.8% a year, compared with 9.7% a year for the S&P (both include dividends). That difference adds up fast. One thousand dollars invested in the S&P in 1987 would be worth $19,200 today. In Constellation Brands, it'd be worth $35,000.
Now have a look at how Constellation Brands earnings compare with S&P 500 earnings:
Strong outperformance here, too. Since 1995, Constellation Brands' earnings per share have grown by an average of 12.2% a year, compared with 6% a year for the broader index.
What's that meant for valuations? Constellation Brands has traded for an average of 17 times earnings since 1987 -- below the 24 times earnings for the broader S&P 500.
Through it all, shares have been strong performers over the last quarter-century.
Of course, the important question is whether that will continue. That's where you come in. Our CAPS community currently ranks Constellation Brands with a three-star rating (out of five). Care to disagree? Leave your thoughts in the comment section below, or add Constellation Brands to My Watchlist.