Do ethics matter to you? If yes, then you may be repulsed by the idea of putting money into “sin stocks” that are involved in activities considered unethical. However, products or services in this space are relatively inelastic, and business is recession-proof. The very nature of their business ensures a steady stream of consumers irrespective of market conditions, which eventually lead to higher margins and solid profits.
And how can we forget that the current stock market turbulence and specter of slower economic growth this year have led to several economists uttering the dreaded “recession” word. The International Monetary Fund is also raising red flags, which makes investing in sin stocks all the more desirable.
But before we zero in on stocks from this tempting space, let’s take a look at what’s in store for these companies in 2019.
Pot Industry Gained Validity
The pot industry is likely to create a lot of noise this year. After all, Canada has become the first major economy to legalize recreational pot, with quite a number of U.S. states giving green signal to cannabis in some capacity last year.
The U.S. Food and Drug Administration did approve its very first cannabis-derived drug, and thus marijuana finally became a legitimate business model last year. Even though such legalization didn’t help pot stocks gain much last year, this development will surely give them a boost over the long run.
The legal weed market is expected to reach a worth of as much as $75 billion by 2030, per investment bank Cowen & Co. This indicates that there are plenty of opportunities for investors to make money from both direct and subsidiary players.
Electronic Cigarette Market is Rapidly Evolving
Thanks to a combination of innovation, regulation and market forces, the electronic cigarette market is developing fast. Despite regulatory clampdown on most flavors and places where these products can be sold, the U.S. e-cigarette market has been expanding with Juul Labs currently owning a lion’s share.
Some skeptics, by the way, may say that tobacco stocks took a beating in the latter half of 2018, but income investors especially cannot ignore them. Lest we forget, tobacco stocks did offer high dividend growth for a pretty long time and on a consistent basis.
Booze Consumption on the Rise
2018, undoubtedly, was a terrible year for alcohol stocks. Both sales and profit margins were under tremendous pressure pushing share prices down. Booze consumption, however, is increasing at a slow but steady pace than a few years back, according to data researcher Nielsen. And this rise in consumption certainly bodes well for alcohol stocks.
Innovation and more shake-ups in recent times like Anheuser-Busch InBev SA/NV’s (
BUD - Free Report) takeover of SABMiller will further help alcohol stock prices spiral upward as 2019 gets underway. Things Are Looking Up for Gaming Company
Robust strategic initiatives helped multi-jurisdictional gaming companies progress by leaps and bounds. But, let’s admit that things are looking up for such companies mostly due to confident consumers.
The Conference Board, a business research group, indicated that the confidence index had fallen to 128.1 last month from 136.4 in November. But, such a reading still shows that consumer spirits are high by historic standards.
VIDEO 4 Sin Stocks to Keep an Eye on in 2019
As mentioned above, sinful stocks are poised to do much better this year. Such stocks not only celebrate good times but are also useful during recessionary periods. We have selected four such stocks from the pot, tobacco, alcohol and gaming industries. These stocks possess a Zacks Rank #3 (Hold). You can see
. the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here GW Pharmaceuticals plc ( GWPH - Free Report) focuses on discovering, developing, and commercializing cannabinoid prescription medicines using botanical extracts derived from the Cannabis plant. The cannabinoid drug maker is expected to see an uptick in sales this year, especially, after its lead drug; Epidiolex became the first cannabis-derived drug to gain approval from the Food and Drug Administration. GW Pharmaceuticals is projected to gain 5.5% next quarter. Altria Group, Inc. ( MO - Free Report) manufactures and sells cigarettes, smokeless products, and wine in the United States. Altria taking stakes in Juul Labs and the way it is marketing the IQOS (a sophisticated electronics that heat specially designed heated tobacco units) will certainly benefit the company this year. Altria is forecasted to gain 17.8% in the current year. Constellation Brands, Inc. ( STZ - Free Report) produces, imports, and markets beer, wine, and spirits in the United States. Thanks to the success of its Corona and Modelo import beers, its revenues increased more than 20% since the beginning of 2016. Constellation Brands is likely to gain 18.9% and 7.7% in the next quarter and the current year, respectively. The Stars Group Inc. ( TSG - Free Report) provides technology-based products and services to gaming and interactive entertainment industries. With a slew of U.S. states set to introduce legal sports betting this year, shares of Stars Group are well positioned to rise. Stars Group is expected to gain 7.3% in the current year. More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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