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. |
 |
Investopedia explains '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 Definitions
Articles Of Interest
-
Investing In Leisure Funds
If you thought investing and fun don't go together, think again. Find out more here. -
Go Green With Socially Responsible Investing
Find out how morals and ethics can bring you a surprising return. -
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. -
Socially Responsible Mutual Funds
It is possible to avoid unethical investments and still profit from mutual funds. Find out how! -
Socially Responsible Stocks: Do Good Deeds Punish Profits?
Socially responsible investing doesn't mean accepting lower returns. Find out why squeaky-clean stocks shine as investments. -
Offset Risk Without Investing Abroad
With a little know-how, you can keep risk from topling your portfolio of domestic equities. -
Survival Tips For A Stormy Market
Learn which stocks to watch and which to avoid when the Dow starts to sink. -
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. -
The Evolution Of Sinful Investing
Like beauty, whether something is sinful often depends whom you ask. -
Stock Basics Tutorial
If you're new to the stock market and want the basics, this is the tutorial for you!
Free Annual Reports