One of the best ways to find profitable investments is by seeking out companies that have products or services that will always enjoy strong demand regardless of overall economic conditions.
There are a lot of uncertainties in the broader market at this time. Rising interest rates, high oil prices, and trade tensions between the U.S. and China all pose potentially serious threats to the stock market. Investors have enjoyed years of stock gains, and with the market still near record highs everyone wants to stay invested, but there is growing concern of a correction looming in the distance.
Finding companies whose products will remain in demand even if the overall economy slows is a great way to keep your money at work in a strong, but uncertain, market.
Sin stocks include a wide range of stocks. These include tobacco, alcohol, gambling, and even some healthcare and military stocks. While you may not agree with the underlying businesses of these stocks, there is no denying the demand for their goods, and the fact that demand will remain strong regardless of the overall economy.
Sin stock also typically come with nice dividend programs to make them even more attractive. Here are five sin stocks that you can be sure will enjoy steady demand for their products in the years to come.
Tobacco and wine maker Altria (MO) sold off sharply during the first half of the year, but the stock hit bottom in May and has trended higher over the last several months. The world is getting more health conscience and smoking rates are falling, but Altria’s Marlboro brand remains one of the most recognizable brands of any product in the world, and the company has done a good job growing profits even as smoking rates have declined. The company grew profits by 9.9% per annum over the last five years, and analysts expect earnings to continue to rise at an average annual rate of 10% over the next five years. MO’s valuation remains very attractive, with a trailing P/E of just 11 and a forward P/E of 14. The solid earnings growth and low valuation makes MO attractive, and the stock’s big dividend program is another incentive for a lot of investors to stay in the stock. MO offers a big 5.2% yield, and the company has a nine-year streak of increases. Analysts have a $68.11 average price target on the stock.
Lockheed Martin (LMT) is a leader in the aerospace and defense sector. Being a leader in the defense sector guarantees Lockheed to enjoy strong demand both domestically and internationally moving forward. Analysts expect huge earnings growth for the company moving forward, with earnings forecast to rise 50.8% per annum over the next five years. LMT has trended strongly higher over the last four months, and analysts see a lot more upside ahead. LMT is currently trading at $348 with an average price target of $383.42. Analysts have a $383.42 average price target on the stock. LMT has a 2.5% dividend yield with a 15-year streak of dividend increases.
Constellation Brands (STZ) is known for its beer, wine and spirits, and the company is looking to the future with a big play in the growing marijuana marketplace. The company recently made a $4 billion bet on the future of marijuana with a big investment in Canadian marijuana company Canopy Growth (CGC), raising its stake in the company to 38% from 9.9%. Constellation understands the disruptive potential recreational marijuana has on the alcohol sector, and its hedge makes it a leader in the rapidly growing sector. As more and more localities move towards medical or recreational marijuana, the growth potential is huge. Constellation is expected to grow earnings by 12% annually over the next five years, but that estimate could be understated if marijuana demand increases to the degree a lot of analysts expect. STZ trades at $226.50 with an average price target of $246.86. The stock has a 1.3% yield.
Boeing (BA) is most commonly thought of as an aerospace company, but its defense segment plays a big role in the company’s overall bottom line. Its defense segment accounts for around 15% of the company’s total revenues, and the company is the second biggest defense contractor in the U.S. Military spending in the U.S. and internationally is expected to remain strong moving forward and should help Boeing continue to grow its bottom line in years to come. The company has enjoyed strong earnings growth of 12.7% annually over the last five years, and analysts forecast Boeing to grow profits 21% per annum over the next five years. BA trades at $382.55 with an average price target of $403.80. BA has a 1.8% yield.
It is not completely fair to lump Hershey (HSY) chocolate bars in the same group as alcohol and tobacco stocks, but health advocates blame sugary snacks and drinks for America’s obesity epidemic and view these foods as very sinful. A shocking 40% of American adults and 20% of American adolescents are obese. Overall, 70% of all Americans are either overweight or obese, which is a shocking figure, and makes it easy to understand why many consider chocolate candy to be sinful. Hershey is a leader in chocolate snacks in the U.S. and the company is expected to grow earnings by 12.8% this year and 9.5% per annum over the next five years. The stock currently offers a 2.7% yield, with an 8-year streak of increases.