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. Active Investing

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

    An geometric waveform that oscillates (moves up, down or side-to-side) ...
  5. Environmental Tariff

    A tax placed on products being imported to or exported from countries ...
  6. Stock Market

    The market in which shares of publicly held companies are issued ...
Related Articles
  1. Investing News

    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. Investing Basics

    The Value Of Sin Stocks

    Typically, “sin stock” refers to the stocks of companies that deal in tobacco, alcohol or other products deemed harmful.
  3. Fundamental Analysis

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

    These four sin stocks are likely to be resilient during a bear market.
  4. Chart Advisor

    Opportunities in Sin Stocks (STZ, SWHC)

    These three sin stocks act and react according to their own unique mechanics, often trading against broad averages.
  5. Investing Basics

    The Ethics Of Investing

    The proper application of ethics to the world of investments is a highly subjective topic.
  6. Mutual Funds & ETFs

    Survival Tips For A Stormy Market

    Learn which stocks to watch and which to avoid when the Dow starts to sink.
  7. Personal Finance

    Industries That Will Never Go Away

    A list of industries that will not perish anytime soon, as they provide and feed our basic needs.
  8. Economics

    Industries That Thrive On Recession

    Find out where to turn when looking to invest in a tumultuous market.
  9. Fundamental Analysis

    Ethical Investing: Socially Responsible Investing

    By Amy Fontinelle Numerous issues make up the social constellation of the ethical investing universe. Many of these issues have to do with a company's relationships with outsiders (we'll cover ...
  10. Stock Analysis

    What’s The Smartest Way To Play Tobacco Stocks?

    While the United States economy continues to grow, the U.S. tobacco industry keeps shrinking.
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. 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 >>
  3. 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 >>
  4. 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 >>
  5. Is there a difference between socially responsible investing (SRI) and green investing?

    There isn't a huge difference between socially responsible investing (SRI) and green investing; green investing is actually ... Read Answer >>
  6. How important are business ethics in running a profitable business?

    Learn how business ethics as a guiding philosophy within a company can have a drastic impact on long-term profitability and ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center