McDonald's (NYSE:MCD) and Constellation Brands (NYSE:STZ) (NYSE:STZ.B) are both generally considered recession-resistant stocks. McDonald's operates and franchises more than 39,000 restaurants in over 100 countries, while Constellation owns over 100 brands of alcoholic beverages, including Corona, Modelo, and Pacifico.

Visits to McDonald's and the consumption of beer usually remain stable through economic contractions, but both companies face secular headwinds. McDonald's faces stiff competition in the saturated fast food market, while Constellation faces waning beer consumption in the U.S. and other developed markets.

A large burger with a glass of beer.

Image source: Getty Images.

The COVID-19 pandemic also disrupted both companies' businesses this year. McDonald's temporarily closed many of its restaurants, while the shutdowns of restaurants, bars, and other businesses throttled sales of Constellation's on-premise drinks.

Yet McDonald's stock still rose about 8% this year, while Constellation's stock advanced about 13%. Both stocks underperformed the S&P 500, but their positive returns indicate that investors are already looking past the current crisis and pricing in their future recoveries. But should you invest in either stock right now?

The Golden Arches start to shine again

McDonald's global comparable store sales rose 5.9% last year, which marked its strongest annual growth in a decade. It attributed that growth to fresh strategies -- including its all-day breakfast, its use of fresh beef, new menu items, renovated stores with digital kiosks, and expanded online ordering and delivery options. Its earnings also grew 5%.

However, the firing of CEO Steve Easterbrook last November over an inappropriate workplace relationship sparked concerns about the Golden Arches' future plans. His successor, Chris Kempczinski, immediately faced a pandemic-induced slowdown throughout 2020.

McDonald's global comps fell 3.4% in the first quarter and plunged 23.9% in the second quarter as it closed many of its stores, but dipped just 2.2% in the third quarter. It reopened most of its stores near the end of the second quarter, and its monthly comps grew sequentially across all regions in the third quarter.

That growth was driven by new menu items -- including spicy Chicken McNuggets and new McCafe bakery items -- and its focus on "doubling down" on the "three Ds" (digital, delivery, and drive-thru).

McDonald's revenue and earnings declined 13% and 23% year-over-year, respectively, in the first nine months of 2020. However, analysts expect its growth to turn positive again in the fourth quarter as it brings back the McRib and continues promoting its new menu items, and for its revenue and earnings to decline just 8% and 21%, respectively, for the full year.

Next year, they expect McDonald's revenue and earnings to rise 14% and 34%, respectively, as the pandemic passes, it accelerates its "three D" plan, and it launches a new chicken sandwich to challenge Chick-fil-A and RBI's Popeyes.

The stars aren't aligning for Constellation yet

Constellation generated over two-thirds of its revenue from its beers last year. The rest came from its wine and spirit brands. The company's high exposure to the beer market is worrisome, since younger drinkers are consuming less beer and pivoting toward hard seltzers and spirits.

Three beer drinkers clink their glasses.

Image source: Getty Image.

To counter that shift, Constellation tried to streamline its business by divesting its cheaper wine brands, its craft beer brand Ballast Point, and Black Velvet whiskey last year.

It also invested in new products, including Corona Hard Seltzer, to diversify its portfolio away from traditional beers, while "premiumizing" its beers, wines, and spirit brands with higher-priced products to offset its slower shipments. It also bought a stake in the cannabis company Canopy Growth, but that investment isn't generating meaningful revenue yet.

Constellation's revenue and adjusted earnings rose 3% and 6%, respectively, last year. Its stronger beer sales offset its declining sales of wines and spirits, which face tough competition from rivals like Brown-Forman. Those declines were further exacerbated by its recent divestments.

In the first half of 2021, Constellation's revenue and adjusted earnings fell 5% and 1%, respectively, as its sales of beer, wine, and spirits all declined during the pandemic. On the bright side, robust sales of its drinks through retail channels partly offset its lower on-premise sales, while its premiumization strategy and divestments boosted its profits.

Analysts expect Constellation's revenue to stay roughly flat this year as its adjusted earnings rise 3%. Next year, they expect its revenue to remain flat as its adjusted earnings improve 8%.

The valuations and verdict

McDonald's trades at a reasonable 25 times forward earnings, and it pays a forward dividend yield of 2.4%. Constellation trades at 20 times forward earnings, and pays a lower forward yield of 1.4%.

McDonald's initially seems more expensive than Constellation, but its growth should accelerate significantly after the pandemic ends. Meanwhile, Constellation could tread water as it tries to offset its weaknesses with its strengths. Therefore, it's arguably smarter to bet on burgers instead of beers right now.