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Tickers in this Article: NOC, WYNN, WMS, TDG, HEI
True or not, so-called "sin stocks" generally have a reputation for being resilient and providing a safe haven to investors during slow economic growth periods. In fact, some believe that companies engaged in selling or distributing things such as weapons/weapon related equipment, tobacco, gambling or alcohol may experience increased demand during trying times. (To learn more about investing in sin stocks, be sure to read The Evolution Of Sinful Investing.)

With that in mind, the following companies may warrant a closer look:

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Market Captialization
$1.1 billion
Northrop Grumman
$15.9 billion
TransDigm Group
$1.8 billion

WMS Industries
$1.1 billion
Wynn Resorts
$3.0 billion
Data as of market close
February 3, 2009

Northrop Grumman Is My Favorite In The Group
The name does not easily roll off the tongue. However, you've probably heard of some of Northrop Grumman's more notable products such as the B-2 bomber. You may also have seen the christening of the aircraft carrier U.S.S. George H.W. Bush on TV awhile back. The massive warship was brought to us courtesy of Northrop Grumman.

The California-based company operates in several areas including aerospace, electronic and information systems; shipbuilding; and technical services. Longer term, I think these areas will be important and the company's expertise will be in demand as we fight the war on terror and look to supply our armed forces with the latest and greatest equipment.

That's the aerial view (pun intended), so to speak.

Fourth-Quarter Results Good
More recently, Northrup's fourth-quarter results were released February 3. In the period ended December 31, the company had earnings per share of $1.57 excluding items. That's pretty good in that analysts had been expecting the company to earn $1.55 a share.

The future appears bright as evidenced by the company's backlog numbers. According to the earnings release: "Total backlog, which includes funded backlog and firm orders for which funding is not currently contractually obligated by the customer, was $78 billion on December 31, 2008, compared with $63.7 billion on December 31, 2007."

High Expectations
Along with its earnings, management offered that it thinks the company will earn $4.50 to $4.75 a share from continuing ops in 2009. However, pension-adjusted results ("as a result of plan returns") are expected to come in at $5.15 to $5.40. According to data on Yahoo Finance, the 2009 estimate is $5.10. In any case, with the shares under $50, that's a good value. (Explore the controversies surrounding companies commenting on their forward-looking expectations in Can Earnings Guidance Accurately Predict The Future?)

Also, the company has a history of paying out dividends. Obviously, these aren't guaranteed. However, the forward yield based on its last dividend payment is north of 3% - a nice little bonus.

Bottom Line
Some think that sin-type stocks have the potential to provide the investor with a safe haven during trying times. The above list may warrant further research.

For both sides of the story, read our related article Socially Responsible Investing Vs. Sin Stocks and learn if your principles make you richer or poorer.

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