Sin Stock

DEFINITION of 'Sin Stock'

A stock of a company either directly involved in or associated with activities widely considered to be unethical or immoral. Sin stocks are found in sectors whose activities are frowned upon by some or most of society, because they are perceived as making money from exploiting human weaknesses and frailties. Sin stock sectors therefore include alcohol, tobacco, gambling, sex-related industries, weapons manufacturers and the military. Also known as “sinful stocks", they are the polar opposite of ethical investing and socially responsible investing, whose proponents emphasize investments that benefit society.

BREAKING DOWN 'Sin Stock'

Investing in sin stocks may be anathema to some investors, but the fact is that many of them are sound investments. The very nature of their business ensures that they have a steady stream of consumers. As well, since demand for their products or services is relatively inelastic, their business is fairly recession-proof. The lesser degree of competition also ensures fat margins and solid profits for sin stocks.

Research suggests that sin stocks are also likely to be undervalued because their negative image leads to them being shunned by analysts and institutional investors. This makes them attractive investments for investors willing to take the plunge, since a number of the biggest sin stocks have great long-term records of generating shareholder value. From 2008 to 2012, the U.S. tobacco, distilleries and brewers sub-sectors generated double-digit annual returns, easily outperforming the broad market.

Some of the best-known sin stocks include Altria Group, Anheuser-Busch InBev, Diageo, General Dynamics, Smith & Wesson, Caesar’s Entertainment, Las Vegas Sands and Philip Morris.

RELATED TERMS
  1. Sin Tax

    A state-sponsored tax that is added to products or services that ...
  2. Vice Fund

    A mutual fund that invests in gaming, such as casino operators ...
  3. Ethical Investing

    Using one's ethical principles as the main filter for securities ...
  4. Active Investing

    An investment strategy involving ongoing buying and selling actions ...
  5. Sine Wave

    An geometric waveform that oscillates (moves up, down or side-to-side) ...
  6. Growth Stock

    Shares in a company whose earnings are expected to grow at an ...
Related Articles
  1. Managing Wealth

    Looking Into Sin Investments

    The stigma that a sin stock receives seems to be more concentrated among individual investors who are certainly entitled to avoid them. The overall market, on the other hand, seems to look favorably ...
  2. Managing Wealth

    Sinful Investing: Is It For You?

    Sin stocks may seen outright undesirable to some, but these "naughty" industries bring stable returns - even in hard times.
  3. Investing

    The Value Of Sin Stocks

    On the whole, these sinful stocks offer little value to society, that doesn't mean they don't have value for investors.
  4. Investing

    The Value Of Sin Stocks

    Typically, “sin stock” refers to the stocks of companies that deal in tobacco, alcohol or other products deemed harmful.
  5. Managing Wealth

    The Evolution Of Sinful Investing

    Like beauty, whether something is sinful often depends whom you ask.
  6. Trading

    Is Now the Time to Invest in Sin Stocks? (BJK, MO)

    Bullish chart patterns on the charts of these sin stocks and related ETF suggests now is the time to buy.
  7. Trading

    Socially Responsible Investing Vs. Sin Stocks

    Can your principles make you richer or poorer? Find out if it pays pick your portfolio based on ethics.
  8. Markets

    Vice Can Be Nice: 4 Sin Stocks to Consider (LVS, MO)

    These four sin stocks are likely to be resilient during a bear market.
  9. ETFs & Mutual Funds

    Socially (Ir)responsible Mutual Funds

    Not concerned about being an ethical investor? Maybe "sinful stocks" have a place in your portfolio.
  10. Trading

    Opportunities in Sin Stocks (STZ, SWHC)

    These three sin stocks act and react according to their own unique mechanics, often trading against broad averages.
RELATED FAQS
  1. Does Canada have Social Security numbers?

    Learn about the Canadian Social Insurance number, which is used by Canadian residents for identification and tax reporting ... Read Answer >>
  2. How do I invest in the stocks of cigarette and oil companies?

    What is the least amount to invest now? ... Read Answer >>
  3. What's the difference between regressive and progressive taxes?

    Learn what a regressive tax is in comparison to a progressive tax, and understand the specific types of taxes that are considered ... Read Answer >>
  4. What are the steps to applying for a Canada Pension Plan (CPP)?

    Learn how to apply for Canada Pension Plan, part of Canada's retirement income system. Also find out about available benefits ... Read Answer >>
  5. What is socially responsible investing?

    In the financial world, where profit and return are often the priorities of the average investor, the vehicles we use to ... Read Answer >>
  6. How does the performance of the stock market affect individual businesses?

    Learn how stock markets affect individual businesses by influencing consumer spending levels and affecting the way companies ... Read Answer >>
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center