After shares of Constellation Brands plunged 7 percent on Thursday, Jim Cramer did his homework to see if it was time to reshuffle his beer stocks.
Constellation Brands is the world's leading purveyor of premium wines and alcohol, and also imports popular Mexican beer brands like Corona, Modelo and Pacifico into the U.S.
Cramer attributed the shares falling to beer sales that weren't strong enough for the bulls, but mainly, due to concerns over President-elect Donald Trump's agenda.
"Investors are worried that the company could get hurt if the Trump administration imposes some kind of cross-border tariff on Mexican imports," the "Mad Money" host said.
Cramer has always favored Constellation over its competitor Molson Coors because Constellation held the rights to Corona and Modelo. However, as 2017 begins to take shape, he became worried.
In October, Anheuser-Busch InBev, the world's largest brewer, closed its $107 billion acquisition of SABMiller, the second biggest brewer. The ultimate winner of this transaction was Molson Coors, because in order for anti-trust regulators to approve the deal, the combined company was forced to sell off various assets
The sale included SABMiller's 58 percent stake in MillerCoors, its joint venture with Molson Coors. Molson snapped it up for $12 billion, much less than it was worth, and it gave them total control of the MillerCoors business that includes Miller Lite, Blue Moon, Coors Lite and Keystone among others.
In addition to the strength of Modelo, Corona and Pacifico, Constellation has made a series of smaller acquisitions, and picked up several fast-growing craft beer brands and high-end wines.
After speaking with Constellation's CEO Rob Sands on Thursday, Cramer came to the conclusion that fears of Trump's agenda are overblown. It's not like Ford or General Motors moving an auto plant from Michigan to Mexico. If they made a Mexican beer in the U.S., it wouldn't really be a Mexican beer.
More importantly, Constellation's management reviewed several different trade legislation scenarios on its conference call, and under each one, said they believe they can continue to generate double-digit earnings growth for the next three years. Additionally, 40 percent of its beer costs are already sourced in the U.S.
"Sure, there are some unknowns in terms of a possible tariff on Mexican goods, but I think that is pretty much baked in at this point, whereas the positives from the company's continued strength are being ignored," Cramer said.
Ultimately, Cramer remained strong on his stance that Constellation is his No. 1, with Molson Coors coming in second.
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