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Tickers in this Article: GD, BA, LMT, WMS, PM, DEO, RTN
Many people believe that over time, stocks of companies that deal in things like alcohol, tobacco, weapons, pornography or gaming - sin stocks - can provide a safe haven in a slowing economy. The trouble is, these types of companies haven't been overly insulated from the present economic crisis and, as a result, many have taken a big hit and are trading in the doldrums.

So, are people failing to turn to sin stocks during hard times?

I don't thinks so. Investors keep coming back to sin stocks because the market for drinking, smoking and gambling never fails to resurface. As such, I don't think these types of companies should be permanently relegated to the doghouse. In fact, many still have real opportunity for investors. (For a closer look at sin stocks, be sure to read The Evolution Of Sinful Investing.)

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Screening for Sin
Let's take a look at some sin stocks that are not only trading near their 52-week lows, but are also expected to post a profit in the current year. Sin stocks tend to come back strong, even when the economy has given them a beating, so these picks may be worthy of additional research.

Company
Market Capitalization
Expected Current Year Earnings
Diageo
(NYSE:DEO)
$26.4 billion
$4.16
General Dynamics
(NYSE:GD)
$14.1 billion
$6.75
Philip Morris
(NYSE:PM)
$65.5 billion
$3.03
Raytheon
(NYSE:RTN)
$13.8 billion
$4.63
WMS Industries
(NYSE:WMS)
$779.8 million
$1.46
Data as of March 6, 2009, intraday


General Dynamics - A Dynamic Pick
Defense-related companies like General Dynamics, Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT) (just to name a few) have a bright future. The reason for that is quite simple. It is these companies that the U.S. relies on to help it defend itself and its allies around the world.

Unfortunately, General Dynamics shares have slipped over the past year. Over the last 52 weeks, the stock is down more than 50%. That's actually a steeper drop than that experienced by the S&P 500.

But despite GD's recent dip, I still think the stock can shine over the long term. In spite of the current economic crisis, the company is expected to bring some fairly big numbers to the bottom line both this year and next; it's expected to earn $6.75 per share in the current year and $7.07 per share in 2010 - a roughly 4.7% expected rate of growth. The price-to-earnings ratio based on the current year's expected earnings is a lowly 5.41.

Of course, these earnings expectations could end up being aggressive, and it's worth noting that GD put out guidance of $6 - $6.10 per share for the year (2009) on March 5. But hey, for a stock that trades under $37 that's not the worst thing in the world. (Explore the controversies surrounding companies commenting on their forward-looking expectations in Can Earnings Guidance Accurately Predict The Future?)

Then there's the dividend, which I think deserves more than a passing glance. On March 4, General Dynamics' board of directors declared a dividend of 38 cents per share, which is a couple of notches higher than the previous dividend. A quick look indicates that it had previously paid 35 cents. The forward yield based on that 35 cents is about 3.8%.

Bottom Line
Sin stocks haven't exactly been a safe haven in this market, but that doesn't mean that they should be cast aside either. General Dynamics is well positioned in the defense sector and, despite the recent beating it has taken, it's primed for producing solid returns for investors in the not-so-distant future.

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