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.
Fool contributor Morgan Housel has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.