4 Sin Stocks to Boost Your Portfolio
Sin stocks include companies that promote or create unethical or immoral products. In an age of “ethical investing” or morality-driven investing, it can seem hard to even consider making room for sin stocks in your portfolio.
However, the 50 largest sin stocks have outperformed the MSCI World Index for the past 43 years, according to UBS (NYSE:UBS)which provides advice and financial solutions to private, institutional and corporate clients worldwide.
Let’s take a look at why you might want to buy sin stocks and the four we’ve chosen to highlight.
Why Buy Sin Stock?
The actions of sin, traditionally referred to as gambling, alcohol and tobacco, are weathering economic turbulence. During recessions and times of economic instability, consumers still drink alcohol, gamble and smoke.
There is a downside, of course. Unfortunately, anxiety, uncertainty and isolation have increased during the pandemic. In fact, alcohol consumption increased by 14% among adults over the age of 30 during the pandemic, which also led to a 41% increase in alcohol consumption among women, according to a RAND Corporation. study as of September 2020. Unfortunately, addiction, relapse and overdose rates have also occurred.
Four stocks of sin to sneak into your portfolio
Consider three stocks of sin that you might want to add to your portfolio.
Constellation Brands Inc., headquartered in Victor, New York, produces, imports, markets and sells beer, wine and spirits worldwide. The company produces beer under the following brands:
- Corona (including Extra, Premier, Familiar, Light, Refresca, Hard Seltzer brands)
- Modelo (including Especial, Negra, Chelada, Pacifico and Victoria brands)
The company also offers wine through the following brands:
- 7 moons
- Cook’s California Champagne
- cooper and thief
- craftsmen’s union
- Kim Crawford
- Mount Veeder
- The Dreaming Tree
- Charles Smith
- Robert Mondavi
The company also produces spirits under the following brands:
- noble house
- Great West
- Mi CAMPO
- Nelson’s Green Brier
The products are intended for wholesale distributors, retailers, on-premises locations and national liquor control agencies.
In fiscal 2022, the company reported EPS of $0.22 and comparable basis EPS of $10.20, including Canopy equity losses of $0.80; excluding Canopy’s equity losses, reached like-for-like EPS of $10.99, an increase of 5%.
The company generated strong operating and free cash flow of $2.7 billion and $1.7 billion, respectively, for fiscal 2022. Returns nearly $2 billion to shareholders in the form of buyouts shares and dividends in fiscal 2022 and expects $500 million in share buybacks in the first quarter of fiscal 2023.
The game is a definite stock of sin. Electronic Arts Inc., headquartered in Redwood City, California, develops and sells games, content and services for game consoles, PCs, mobile phones and tablets worldwide. Electronic Arts offers games under the following brands: Battlefield, The Sims, Apex Legends, Need for Speed, and Plants vs. Zombies as well as the FIFA, Madden NFL, UFC, NHL, Formula 1 and Star Wars brands (the company licenses its games to third parties to distribute and host its games).
The Company also provides advertising services through digital distribution and retail channels, as well as through mass market retailers and specialty stores.
Net bookings for the last 12 months were $7.254 billion, up 22% year-over-year and active accounts grew by more than 540 million unique active accounts.
Net cash provided by operating activities was $1.534 billion for the quarter and $1.826 billion for the trailing 12 months. The company repurchased 2.4 million shares for $325 million during the quarter, bringing the trailing 12-month total to 9.4 million shares for $1.3 billion. The company also paid a cash dividend of $0.17 per share during the quarter.
Could you consider corporate actions related to snacks to be “actions of sin?” Of course – sugar!
Mondelez International Inc. (formerly known as Kraft Foods Inc.), headquartered in Chicago, manufactures and sells snacks and beverages worldwide, such as cookies, crackers, savory snacks, chocolates, gummies, candies, powdered drinks and more. .
The company sells to supermarket chains, wholesalers, supercenters, convenience stores and other food outlets.
Over the full year 2021, Mondelez saw its net sales increase by 8.0%, in part thanks to its organic net sales (up 5.2%). Diluted EPS was $3.04, an increase of 23.1%. Adjusted EPS was $2.87, up 9%. Cash provided by operating activities was $4.1 billion, an increase of $0.2 billion over the prior year, and free cash flow was 3 .2 billion, an increase of $0.1 billion.
The return of the company’s capital to shareholders was $3.9 billion. In the fourth quarter, net revenue increased 4.9%, driven by organic net revenue growth of 5.4%.
Diluted EPS was $0.71, down 11.3% and Adjusted EPS was $0.71, up 9.1%, and fourth quarter return of capital to shareholders was 0 $.8 billion.
The Hershey Company, headquartered in Hershey, Pennsylvania, may represent one of the most significant “sin stocks” – chocolate. manufactures and sells chocolate and other confectionery products and snacks. You’ve heard of most brands: Hershey’s, Reese’s, Jolly Rancher, Almond Joy, Cadbury, Kit Kat, Payday, Rolo, Twizzlers, Whoppers, York, Ice Breakers, Breath Savers, Bubble Yum, SkinnyPop, Dot’s Homestyle Pretzels and After.
The company’s products are aimed at wholesale distributors, grocery chains, mass merchandisers and more. The company was founded in 1894 and is based in Hershey, Pennsylvania.
In the fourth quarter of 2021, The Hershey Company reported consolidated net sales of $2,326.1 million, an increase of 6.4% and reported net income of $335.6 million, or $1.62 per diluted share, an increase of 16.5%. Adjusted earnings per share increased by 13.4%.
In 2021, the company achieved consolidated net sales of $8,971.3 million, an increase of 10.1%. Reported net income was $1,477.5 million, or $7.11 per share diluted, an increase of 16.4%.
Do you think you should add sin stocks to your portfolio?
Even if they look “gross”, it’s a good idea to consider adding sin stocks to your portfolio. They can protect against fluctuations in the economy and give your portfolio an edge. Always remember that you can invest in more innocuous stocks, such as companies that manufacture chocolate and sweets.