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Tags: vice | sin | stocks | portfolio

3 'Vice' Stocks to Spice Up Your Portfolio

3 'Vice' Stocks to Spice Up Your Portfolio
 Vclements | Dreamstime.com

By    |   Friday, 10 May 2019 01:06 PM EDT

Good economic times or going through a tough financial spell, it’s a safe bet that many Americans will always want to smoke, gamble and/or own firearms.

So as a result, InvestorPlace.com recently suggested some “controversial stocks to buy offer viable shareholder returns” because of their “resilient demand.”

Here is a look at three of the 10 “sin” stocks InvestorPlace suggested:

Altria Group (MO)

“Although broader smoking trends are declining, millennials are more likely to start the habit. According to ScienceDaily.com, a shift in youth subculture – such as delaying baby-making – facilitates living on the edge,” InvestorPlace Contributor Josh Enomoto explained. “Cynically, this backdrop pushes MO into a viable list of contrarian stocks to buy. Additionally, you can’t overlook its 6% dividend yield.”

Wynn Resorts (WYNN)

Clark County, Nevada’s gaming revenue hit $10.25 billion, topping $10 billion for the first time since the sub-prime lending crisis.

Sturm Ruger & Company (RGR)

“As much as the left would like you to believe otherwise, Americans love guns. Not only that, the gun-buying demographic is much wider than you think,” the report said.

“Don’t believe me? Look what happened in California last month. A federal judge ruled that preventing Californians from buying standard and high-capacity magazines is unconstitutional. Opposing factions pressured the judge to reverse course, but not before millions of “freedom sticks” found their way into many Golden State homes,” it said. “California and other liberal states are just waiting for another black-swan event. If that occurs, watch out: firearms investments like RGR stock stand to benefit greatly.”

To be sure, many investors struggle with the ethics of some substances. For example,  is marijuana a medicine or a vice?

The $8 trillion U.S. socially responsible investment industry is grappling with that question as more states approve the recreational use of cannabis, pushing consumption closer to “sin” stocks like alcohol and tobacco that ethically focused investors avoid, Reuters recently explained. 

Marijuana is used to treat a range of conditions from epilepsy to migraines.

Faith-based investors, including some Christian college endowments, are more likely to eschew cannabis completely, while other socially focused clients avoid companies that produce marijuana but will tolerate companies that may sell it as part of their larger business, she said.

“If there’s a standardized product you can find at a corner store, you may not want to eliminate big parts of the investment universe when cannabis is a small part of a company’s revenues,” she said.

Funds that do not pass ESG (environmental, social and corporate governance) screens like those by index providers such as MSCI Inc will have a narrower list of potential investors, potentially leaving their stock trading at lower price-to-earnings multiples.

And for sassy investors will to up the ante, they can pump cash into The Vice Fund, a mutual fund (MUTF: VICEX) managed by USA Mutuals which focuses its investments on vice industries considered by many to be socially irresponsible investments.

"If you have this fund that makes you feel good, those good-feels often come with slightly off-the-market performance. We're the only fund out there that sells sin, so there's a lot of growth potential to it," the fund's manager, Gerry Sullivan, told CNBC. "The average person that owns our fund doesn't feel good about owning it, but they hold on for the diversification and the returns."

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Good economic times or going through a tough financial spell, it’s a safe bet that many Americans will always want to smoke, drink and/or own firearms.
vice, sin, stocks, portfolio
Friday, 10 May 2019 01:06 PM
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