Investors have soured on Constellation Brands (STZ 3.96%) recently, with shares down over 20% since mid-September. The alcoholic beverage specialist remains far ahead of the market over wider time frames, though, having doubled in the past five years compared to a 50% increase in the S&P 500.

This latest drop could represent an attractive entry point for investors who are looking for a well-run business that has multiple options for strong growth ahead.

Friends smiling and cheering with beer

Image source: Getty Images.

Strength in beer

Constellation Brands lowered its earnings outlook in the most recent quarter. Investors reacted harshly to that news since they've grown to expect mainly upward revisions to that forecast. The company has boosted profits by 20% or more in each of the last five fiscal years, after all.

Sure, that expansion pace is set to slow to around 10% in fiscal 2020, but not because of any demand challenges in its core brands. In fact, the Corona and Modelo franchises continue to win market share even as the company raises prices for these popular beer imports. The earnings pressure is instead mostly a product of struggles on the value end of Constellation's wine and spirits portfolio. That headwind has combined with a marketing boost aimed at supporting the rollout of Corona Premier to depress the earnings profile right now.

Yet the company is still on track to expand beer sales at a heady 11% pace this year, so any profitability pinch is likely to be temporary.

Excellent capital allocation

The company's acquisition of the beer business in 2013 sparked a 5-year period of expanding sales and profit margins as Constellation Brands took full advantage of the consumer demand shift toward premium alcoholic beverages. The move also led to a flood of cash, with operating cash flow reaching a record $1.9 billion last year.

The good news for investors is that Constellation Brands' management team is adept at allocating cash toward high-return business investments. In recent years, those initiatives have included expanding capacity and taking more control over production in its Mexican brewery network. The company has also aggressively hiked its dividend and plans to return about $4.5 billion to investors through that channel, plus stock buybacks, over the next three years.

Management has a good track record for making bold, but calculated purchases of other brands, too. The buyout of the U.S. rights to Corona is one prime example, but Constellation has logged many other smaller wins in the premium beer, wine, and spirits niches.

Check out the latest earnings call transcript for Constellation Brands.

Choose your own adventure

The company's $4 billion investment in cannabis giant Canopy Growth (CGC -0.84%) gives it a roughly 30% stake in that business, and management has the option to boost that holding significantly if the global marijuana market develops at the breakneck pace many industry watchers are predicting.

Yet Constellation Brands has structured this investment in a way that exposes investors to lots of that potential upside, with more limited downside risks. Regulatory hurdles could delay or foreclose Canopy Growth's access to key markets like the U.S., after all, so a hedged bet on the niche makes sense.

In the meantime, Constellation Brands has a killer core portfolio of beer, wine, and spirits that it can continue using to pad investor returns. In that way, a potential marijuana boom would represent more of a bonus for shareholders on top of an already high-performing business that's winning market share across most of the premium alcoholic beverage niches.