DEFINITION of 'Sin Stock'

A sin stock refers to a publicly traded company that is either involved in or associated with an activity that is considered to be unethical or immoral. Sin stocks are generally found in sectors that deal directly with activities are frowned upon because they are perceived as making money from exploiting human weaknesses and frailties. Sin stock sectors usually include alcohol, tobacco, gambling, sex-related industries and weapons manufacturers, but they can also be defined by regional and societal expectations that vary widely across the globe. For example, brewing has a long, proud tradition in much of the world, so alcohol stocks are not necessarily considered sin stocks by everyone. Political leanings can also influence what is branded as a sin stock, as some people's lists will include all military contractors, while others may consider supporting the military a patriotic duty. Also known as “sinful stocks", sin stocks sit on the opposite end of the spectrum from ethical investing and socially responsible investing, where the goal is to seek out investments that yield an overall benefit for society.


Sin stocks are difficult to classify with any certainty as it depends on an investors individual feelings towards an industry. Is a share in a company based in a country with a history of human rights violations a sin stock? It depends on where your moral code stands on the issue. That said, tobacco firms like Altria Group and Phillip Morris are often on the list, as are booze producers like Anheuser-Busch InBev and Diageo. Weapons manufacturers like Smith & Wesson Holding Corp make the list too, but General Dynamics may not be depending on what your views are on providing combat systems and vehicles to militaries are. Gambling, of course, has a number of stock offerings that are usually tied in with hotel/real estate/entertainment like Caesars Entertainment Corporation or Las Vegas Sands Corp. In these cases, the burden on the investor to figure out just how much of the revenue is from the sinning and how much is from the other sides of the business - and, most importantly, how much you care. 

The Upside of Sin Stocks

Investing in sin stocks may be disagreeable 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 more recession-proof than other companies. Adding to the downside protection, there is the social and regulatory risks that discourage competitors from entering the market. This lesser degree of competition 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 2002 to 2017, sin stocks have generally outperformed socially responsible stocks. That said, moral-free indexes like the Russell 1000 have beat out both over that time. 

More interesting is the fact that many financial stocks in socially responsible investing funds were caught up in the 2008 mortgage scandals and financial crisis, putting the whole question of sin in a new light. Is selling people booze worse than putting them into houses they can't afford and financially ruining them? It all depends on your moral code.

  1. Revenue Act Of 1862

    The Revenue Act of 1862 was passed by Congress to fund the Union ...
  2. Socially Responsible Investment ...

    Socially responsible investing looks for investments that are ...
  3. Regressive Tax

    A regressive tax is a tax that is applied uniformly, resulting ...
  4. Tobacco Tax / Cigarette Tax

    A tobacco or cigarette tax is imposed on all tobacco products ...
  5. Impact Investing

    Impacting investing is investing that aims to generate specific ...
  6. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the ...
Related Articles
  1. Managing Wealth

    Sinful Investing: Is It For You?

    Sin stocks may seem outright undesirable to some, but these "naughty" industries bring stable returns — even in hard times.
  2. Investing

    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.
  3. Investing

    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.
  4. Investing

    5 Tempting Sin Stocks (RAI,MO,TAP,CZR,BYD)

    These five sin stocks have performed well over the last year. Will this trend continue?
  5. Investing

    Tobacco Stocks Are Still Addictive

    The tobacco industry has been one of the top performing sectors over the last decade.
  6. Investing

    Lift A Glass to the Whiskey ETF (WSKY)

    The world’s first whiskey ETF paves the way for individual spirits-based funds.
  7. Insights

    Industries that thrive on recession

    Recessions are hard on everyone – aren't they? Actually, just as wars have their war babies, recessions have their tough offspring as well.
  8. Investing

    America's Gun Love Boosts Firearm Stocks As Sales Surge

    It’s no secret that Americans love guns. So much so, that even the mere threat of banning their sales has sparked rising firearm adoption. For investors, that might be a good thing.
  9. Investing

    A Guide to Faith-Based Investing

    If you've wondered how to invest in a way that reflects your faith, we've got the answers for you.
  10. Investing

    Socially Responsible Mutual Funds

    It is possible to avoid unethical investments and still profit from mutual funds. Find out how!
  1. 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 >>
  2. Why is social responsibility important in marketing?

    Social responsibility in marketing can drive consumers toward products and services, enhancing company's brand as well as ... Read Answer >>
  3. Why is social responsibility important to a business?

    Socially responsible companies improve their brand, attract and retain top talent, and improve relationships with their customers ... Read Answer >>
Trading Center