12 Best Sin Stocks To Invest in 2024

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In this article, we discuss the 12 best sin stocks to invest in 2024. To skip the detailed analysis of the sin stocks, go directly to the 5 Best Sin Stocks To Invest in 2024.

Publicly listed companies whose revenues are generated by things usually considered unethical are called “sin stocks”. They are the stocks of the companies that are involved in businesses like alcohol, tobacco, gambling, adult entertainment, weapons manufacturing, and cannabis. It is important to keep in mind that this idea could be subjective. For example, while a lot of people consider cannabis a harmful drug, others consider it beneficial, especially medical marijuana.

Sin stocks are quite popular among investors because of their potential for strong financial performance, including dividends and capital appreciation. Some sin stocks have even performed better than the defensive consumer staples sector over the last three rough economic years. After the stock markets around the globe crashed in February 2020, many stocks and ETFs hit their lowest on March 20, 2020. Some of them included Constellation Brands, Inc. (NYSE:STZ), MGM Resorts International (NYSE:MGM), and Consumer Staples Select Sector SPDR Fund (XLP). Since then, Constellation Brands, Inc. (NYSE:STZ) and MGM Resorts International (NYSE:MGM) have gained over 100% and 390% as of the December 14 market close, respectively. On the other hand, the Consumer Staples Select Sector SPDR Fund (XLP) is up just by over 41%. The inelastic demand of sin stock consumers makes them one of the best recession-proof investments.

The Effect of the Word “Sin”

It is commonly believed that sin stocks are usually avoided by institutions, and in turn, it negatively affects these companies. However, a Columbia Business School report suggests that it is not entirely true. The research mentions a research paper by Shivaram Rajgopal, the Kester and Byrnes Professor of Accounting at Columbia Business School, and his co-authors, Robert Eccles, visiting professor at Oxford University, and Jing Xie, assistant professor at Hong Kong Polytechnic University. According to their research, their investigation initially found that institutions generally have less equity in such companies. However, the trend mostly faded away when they adjusted for variations in key fundamentals such as historical performance and investment in research and development between sin and non-sin stocks. In conclusion, the word “sin” matters less to institutions than weaker or riskier fundamentals. Shivaram Rajgopal said:

“Regardless of the stigma associated with sin stocks, institutions would probably be expected to hold more of, say, profitable firms, larger firms, firms with better past performance, and so on.”