An updated edition of the March 28, 2025, article.

When most people think of investing, they picture portfolios filled with blue-chip companies, tech innovators and green energy ventures. But beneath the surface of the mainstream market lies a less conventional corner known as the “sin stocks” market. This niche area is built on companies involved in activities considered unethical or immoral by some societal standards, yet often deliver consistent returns.

Sin stocks refer to shares of companies involved in industries that are generally frowned upon due to moral, ethical, or social concerns. Common sectors include alcohol, tobacco, cannabis and gambling. Despite ethical concerns, sin stocks have consistently outperformed broader markets, driven by strong cash flows, loyal customer bases and inelastic demand. While socially responsible investing has grown in popularity, many investors continue to view sin stocks as resilient, defensive and financially rewarding assets.

Here’s Why Some Investors Choose Sin Stocks

Despite the ethical debates they provoke, sin stocks remain a compelling choice for many investors due to their consistent performance, stability and long-term value. Rather than appealing to moral considerations, these companies attract interest for their ability to deliver strong financial returns across market cycles.

Historically, sin stocks have outperformed the broader market over long periods. These businesses typically boast high-profit margins, stable cash flows and resilient customer bases, leading to above-average shareholder returns. One of the key advantages of sin stocks is their recession resistance. In economic downturns, while consumers may scale back discretionary spending, they often continue purchasing alcohol, cigarettes and engaging in low-cost forms of entertainment like gambling. This makes sin stocks effective defensive plays in times of market volatility.

These companies also benefit from inelastic demand. Products like tobacco and alcohol are typically purchased regardless of price increases. Combined with strong brand loyalty, this leads to steady and predictable revenue streams. Customers tend to remain loyal to their preferred brands for years, if not decades, enhancing business stability.

Additionally, sin stocks tend to generate robust free cash flows, which support generous shareholder returns through dividends and stock buybacks. This financial discipline, along with consistent earnings, makes sin stocks an attractive option for income-focused and long-term investors alike.

Companies like Molson Coors (TAP Quick QuoteTAP - Free Report) and Boyd Gaming (BYD Quick QuoteBYD - Free Report) stand to gain from the evolving trends in their respective industries. While alcohol companies like Molson Coors remain committed to growing market share through innovation and premiumization, gambling stocks like Boyd Gaming focus on property upgrades and strategic investments to propel growth.

Alcohol companies continue to thrive on steady consumer demand, strategic marketing and powerful brand recognition, supported by the global expansion of iconic labels. According to ResearchAndMarkets.com, the U.S. alcoholic beverages market is expected to grow from $544.19 billion in 2024 to $709.13 billion by 2029, seeing a CAGR of 5.4%.

The tobacco industry is also evolving, with companies investing in reduced-risk alternatives like e-cigarettes and heated tobacco products. Per a recent report by Future Market Insights, the global tobacco market will grow from $921.4 billion in 2024 to $1,198.4 billion by 2035, witnessing a CAGR of 2.3% from 2025 to 2035, signaling sustained relevance amid evolving consumer preferences.

The gambling industry has experienced significant expansion, driven by online betting, casino growth and sports wagering legalization. According to Grand View Research, the global online gambling market was valued at $78.66 billion in 2024 and is projected to expand, seeing a CAGR of 11.9% from 2025 to 2030.

With strong brand recognition, pricing power and recession-resistant qualities, sin stocks remain attractive options for many investors. While ethical concerns may deter some investors, others see them as an opportunity to capitalize on industries with deep-rooted consumer demand and long-term financial strength.

If you are looking to capitalize on this trend, our Sin Stocks Screen makes it easy to identify high-potential stocks such as Philip Morris International Inc. (PM Quick QuotePM - Free Report) , MGM Resorts International (MGM Quick QuoteMGM - Free Report) and Diageo Plc (DEO Quick QuoteDEO - Free Report) .

Explore 30 cutting-edge investment themes with Zacks Thematic Screens and uncover your next big opportunity.

Philip Morris is undergoing a bold transformation, reshaping its business model to lead the industry toward a smoke-free future, redefining its identity and business model to lead the tobacco industry into a smoke-free future. Once synonymous with traditional cigarettes, the company has repositioned itself as a global powerhouse in reduced-risk products (RRPs), leveraging innovation, strategic acquisitions and robust pricing power to fuel its evolution.

While PM aggressively pursues smoke-free growth, it continues to maintain a strong and profitable presence in its traditional combustible business. This dual-pronged approach — investing in the future while optimizing the present — enables the company to generate a steady cash flow, even as cigarette volumes decline. Strategic market penetration, product innovation and disciplined pricing ensure that profitability remains strong amid changing consumer behaviors and regulatory pressures.

Importantly, Philip Morris’ transformation is more than a diversification play; it reflects a paradigm shift within the industry. The company’s long-term vision is clear — by 2030, it aims to become a majority smoke-free business, with reduced-risk products driving the bulk of its revenues. In doing so, PM is not only adapting to global health trends but also setting the benchmark for innovation, sustainability and leadership in the next generation of nicotine delivery.

With its Zacks Rank #1 (Strong Buy), Philip Morris continues to deliver on both strategic ambition and financial performance. As IQOS and ZYN accelerate global momentum and consumer acceptance grows, the company is well-positioned for long-term value creation in a rapidly evolving landscape. You can see the complete list of today’s Zacks #1 Rank stocks here.

MGM Resorts is a leading global hospitality and entertainment company with a strong portfolio of iconic properties in Las Vegas and regional U.S. markets, along with a growing international presence through its stake in MGM China and expansion into Japan. As the gaming and tourism industries rebound, MGM is well-positioned to capitalize on robust consumer demand, strategic digital growth and operational efficiency.

MGM commands a dominant position on the Las Vegas Strip with marquee resorts such as Bellagio, MGM Grand and ARIA. These high-traffic assets benefit from the ongoing recovery of leisure and convention travel, as well as record-breaking visitor spending. MGM’s digital strategy is anchored by BetMGM, its fast-growing online sports betting and iGaming platform, operated in partnership with Entain. BetMGM is now a leading player in the U.S. markets, with double-digit market share in multiple states.

With a resilient business model, strong market positioning and multiple secular growth drivers, MGM is well-suited for long-term investors seeking exposure to the convergence of travel, gaming and digital entertainment. The Zacks Rank #3 (Hold) company’s expansion efforts, particularly in Asia, provide long-term growth catalysts.

Diageo is a leading global beverage alcohol company with a world-class portfolio of spirits and beers, including iconic brands such as Johnnie Walker, Guinness, Tanqueray, Don Julio, Captain Morgan and Smirnoff. With operations in more than 180 countries and deep penetration across both mature and emerging markets, Diageo offers a compelling long-term investment opportunity built on brand strength, premiumization and disciplined execution.

DEO’s long-term strategy is anchored in premiumization — prioritizing a shift toward higher-margin, super-premium and ultra-premium offerings. This approach strengthens brand equity, deepens consumer loyalty and drives higher revenue per unit, while providing resilience against inflationary and input cost pressures. Diageo also continues to invest in product innovation and marketing to stay ahead of evolving consumer trends, with a strong focus on high-growth segments such as Ready-to-Drink and low/no-alcohol beverages. Leveraging AI-driven consumer insights, the company delivers highly targeted campaigns and product launches that resonate across diverse markets.

At the same time, Diageo is expanding its direct-to-consumer and digital commerce platforms to enhance reach and engagement. Complementing these efforts, the company is optimizing its $2-billion productivity program to drive operational efficiency while supporting long-term sustainable growth. This initiative carefully balances cost savings with strategic reinvestment in brand building, marketing and consumer experience, reinforcing the Zacks Rank #3 company’s competitive edge and growth trajectory.