Sin stocks include companies that promote or manufacture unethical or immoral products. In the age of “ethical investing” or ethical-driven investing, it may seem difficult to consider making room for sin stocks in your portfolio.
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However, according to UBS (NYSE: UBS), the 50 largest sin stocks have surpassed the MSCI Global Index in the last 43 years, providing financial advice and solutions to individual, institutional and corporate clients worldwide.
Let us know why you might want to buy a stock of sin and the four that we have chosen to highlight.
Why buy sin stock?
Sin stocks, traditionally known as gambling, alcohol and tobacco, are resilient in economic instability. In times of recession and economic instability, consumers still drink alcohol, gamble, and smoke.
Of course, there is a downside. Unfortunately, anxiety, uncertainty and isolation have increased during the epidemic. In fact, alcohol consumption among adults over the age of 30 increased by 14% during the epidemic, resulting in a 41% increase in alcohol consumption among women, according to a study by RAND Corporation from September 2020. Unfortunately, addiction, spiking relapses and overdose rates also occurred.
Four scene stocks to hide in your portfolio
Let’s consider three sin stocks that you may want to pop into your portfolio.
Star Brands (NYSE: STZ)
Constellation Brands Inc., Victor, headquartered in New York, produces, imports, markets and sells beer, wine and spirits worldwide. The company produces beer under the following brands:
- Corona (Extra, Premier, Familiar, Light, Refreska, Hard Seltzer Brand)
- Models (including Special, Negra, Chelada, Pacifico and Victoria brands)
The company offers wine through the following brands:
- 7 moons
- Cook’s California Champagne
- Cooper and the thief
- Craftsmen’s Union
- Kim Crawford
- Miomi
- Mount Wider
- Rafino
- Simi
- The tree of dreams
- Charles Smith
- Captive
- Robert Mandavi
- Shredder
The company manufactures spirits under the following brands:
- Great house
- High West
- My field
- Nelson’s Green Briar
- Witness
Products go to wholesale distributors, retailers, on-premises locations and state alcohol regulators.
In FY2022, the company reported EPS of $ 0.22 and comparable EPS of $ 10.20, including a canopy equity loss of $ 0.80; Canopy has earned EPS of $ 10.99, a 5% increase, on a comparable basis, excluding equity losses.
The company generated strong operating and free cash flow of $ 2.7 billion and $ 1.7 billion, respectively, for FY2022. The repurchase of shares and dividends in FY 2022 returns about $ 2 billion to shareholders and plans to repurchase $ 500 million shares in the first quarter of 2023.
Electronic Arts Inc. (NASDAQ: EA)
Gaming is a certain sin stock. Electronic Arts Inc. develops and sells games, content, and services for game consoles, PCs, mobile phones, and tablets worldwide, headquartered in Redwood City, California. Electronic Arts offers games under the following brands: Battlefield, The Sims, Apex Legends, Need for Speed and Plants vs. Zombies, as well as FIFA, Madden NFL, UFC, NHL, Formula 1 and Wars to the parties. To distribute and host).
The company provides advertising services through digital distribution and retail channels and through a wide range of retailers and specialty stores.
Net bookings for the last 12 months were $ 7.254 billion, up 22% year on year, and active accounts grew by more than 540 million unique active accounts.
Net cash paid by operating activities $ 1.534 billion for the quarter and $ 1.826 billion for the next 12 months. The company repurchased 2.4 million shares at 32 325 million in the quarter, bringing the total to 9.4 million shares at 3 1.3 billion in the last 12 months. The company also paid a quarterly cash dividend of $ 0.17 per share.
Mondelez International Inc. (NASDAQ: MDLZ)
Can you consider the shares of a snack-related company as “sin stock”? Of course – sugar!
Mondelez International Inc. .
Brands include:
- Cadbury
- Milka
- Tubleron
- Orio
- Belvita
- Hall
- Trident
- Tang
The company sells supermarket chains, wholesalers, supercenters, convenience stores and other food outlets.
For the full year 2021, Mondelez net revenue grew 8.0%, driven in part by organic net revenue (5.2% growth). Mixed EPS was $ 3.04, an increase of 23.1%. Adjusted EPS was $ 2.87, 9% higher. The cash provided by operating activities was $ 4.1 billion, an increase of $ 0.2 billion over the previous 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 Q4, net revenue grew 4.9%, driven by a 5.4% organic net revenue growth.
Mixed EPS was $ 0.71, down 11.3% and adjusted EPS was up 7 0.71, up 9.1%, and in Q4, shareholder capital return was $ 0.8 billion.
Hershey Company (NYSE: HSY)
Hershey Company, headquartered in Hershey, Pennsylvania, may represent one of the most prominent “sin stocks” – chocolate. Makes and sells chocolate and other confectionery products and snack items. 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 more.
The company’s products go to wholesale distributors, chain grocery stores, mass merchandisers and much more. The company was founded in 1894 and is headquartered in Hershey, Pennsylvania.
In Q4 2021, Hershey reported consolidated net sales of 2,326.1 million, an increase of 6.4%, and reported net income of $ 335.6 million, or 6 1.62 per share, a 16.5% increase. Consistent earnings per share increased 13.4%.
In 2021, the company saw consolidated net sales of $ 8,971.3 million, an increase of 10.1%. The reported net income was $ 1,477.5 million, or $ 7.11 per share-mixed, an increase of 16.4%.
Do you think you should add scene stock to your portfolio?
Even if they sound “icky”, it’s a good idea to consider adding sin stocks to your portfolio. They can keep the economy afloat and give your portfolio an edge. Always remember that you can invest in more innocuous stocks, such as companies that produce chocolate and sugar products.
