More data on consumer strength for the week ahead-also, a beer and wine company I like

2/24/2008 4:23 pm CT Sunday

By Dave Harris

Questioning if the country is in a recession is perhaps not as important as the strength of the consumer. That's why this week Friday's data on personal income and spending for January is of special significance. Consumer inflation came in slightly higher last week. And although the Fed's minutes indicated that downside risks to economic growth remain, Wall Street questions if another cut on or before March 18^th will do any good.

I would keep a close eye on the PPI number on Tuesday and that personal income data Friday. The home sales figures are unlikely to really move the market. Are we heading towards stagflation? I doubt it. I think some companies have really surprised to the upside lately. Hewlett-Packard (HPQ) for example, had a great third quarter. The company also guided above views. I wouldn't buy into the techs just yet. That was the success story of 2007. You may want to take a little profit on the stock if you own it.

On Monday, upscale retailer Nordstrom (JWN) reports. That'll give some more clues as to where the consumer is headed in addition to the other data this week. Thursday is department store Kohl’s (KSS) and entertainment conglomerate Viacom (VIA). These aren't big market movers, so I think the economic data will guide the market this week.

The kinds of stocks I like in this environment are the defensives. Have you looked at Constellation Brands (STZ) lately? Here’s a company that knows its focus. Recently, the wine and beer maker said it's selling the Inglenook and Almaden brands. I applaud that decision as STZ knows what sells and what doesn't. They sell all over the world in 150 countries with hundreds of brands and an 86 percent share of the US market! They’ve got the famous Nathanson Creek, Manischewitz , Arbor Mist wines and Corona beer. The stock is at $20 and it should be at $26. I would buy it right now.