3 Tempting Sin Stocks for the Adventurous Investor
Many stock market participants have been moving towards ethical investing in recent years. Continued awareness of environmental and social issues has led to the development of strategies that focus on socially responsible investing. This investment model considers the impacts of companies on society and the environment, as well as scrutinizing corporate culture and behavior. “Sin stocks,” as they’re called, are getting sidelined as a result.
Sin stocks belong in industries that most people in society have found to be morally or ethically questionable including tobacco, gambling, weapons, alcohol, and adult entertainment. Proponents of SRI and ethical investing tend to exclude these industries from their consideration.
But if you’re willing to bet on a company’s performance and growth prospects without moral prejudice, then let’s take a look at three sin stocks to buy to see what fits your preferences.
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Monarch Casino and Resort (MCRI)
First in our list belongs the gambling sector, Monarch Casino & Resort (NASDAQ:MCRI), which owns and operates the Atlantis Casino Resort Spa in Reno, NV and Monarch Casino Resort Spa in Black Hawk, CO. MCRI aims to offer its guests the best possible travel experience with 61,000 square feet of casino space in the Atlantis, including food outlets, snack bars, health spas, and salons.
Its Monarch site boasts more than a thousand slot machines, 40-plus table games, one live poker room, and ten bars and lounges. Monarch’s two noted sites and their strong operational capabilities are set to take advantage of the recent travel boom as a preferred destination.
MCRI has been actively strengthening its financials by improving its balance sheet and driving up its revenues. The company reduced its liabilities from $269,677 million at the end of 2019 to $153.988 million in 2022. Revenues have also grown consecutively for two straight years. No wonder analysts love MCRI so much; all three analysts covering the company agree that it is a strong buy with a $95 fair value price. We also agree that Monarch is showing promise, so we’re including it on the list of sin stocks to buy.
Vector Group (VGR)
Source: Shutterstock
Next on our list of sin stocks is from the tobacco industry. Vector Group (NYSE:VGR) is a holdings company that offers discount cigarettes in the U.S. via Vector Tobacco and Liggett Group LLC. VGR also operates New Valley LLC, which focuses on real estate, but the majority of the company’s revenues are generated under the cigarette operations of the Vector and Ligget brands. VGR holds a portfolio of a hundred cigarette brands to cater to a wide range of consumer smoking preferences.
With inflation still at higher levels, VGR has taken advantage of the market’s inclination to discount brands. As a result, the company enjoyed a YoY increase in market share on both the retail and wholesale fronts.
Vector’s continued transition from income-based to volume-based results for its discount brand Montego, is one of the critical drivers for its performance and successful long-term plans to increase shareholder value. It’s, therefore, no wonder Oppenheimer Holdings sees VGR as a ‘Strong buy’.
Anheuser-Busch Inbev SA (BUD)
Source: legacy1995 / Shutterstock.com
Last on our list is from the alcohol industry and the producer of some of the most recognized beer brands. Anheuser-Busch Inbev SA (NYSE:BUD) is a beer brewing company best known for its brands Budweiser, Bud Light, Corona, and Stella Artois. Be it as it may, BUD recently faced a marketing disaster as a result of featuring transgender TikTok star Dylan Mulvaney in one of their brand promotions. This sparked outrage among it’s customers leading the stock to tank ~18% in May 2023. The company’s global momentum was affected as a result, but it still managed to reach 7.2% revenue growth YoY in Q2.
BUD also reported a $0.72 quarterly EPS for Q2 this year, beating analyst estimates by 9.09%. The company is focused on investing in three key priorities: lead and grow in different expansion categories, optimize the business, and digitize and monetize its ecosystem.
Despite the recent marketing issues, BUD’s stock hasn’t fully recovered despite future-facing strategies and strong brand presence still present value to investors. Putting it all together, we think this is why analysts still recommend the stock as a “buy.”
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.
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