Typically, “sin stock” refers to the stocks of companies that deal in tobacco, alcohol or other products deemed harmful. The belief is that these products offer no value to society, or even cause harm.In the stock market, however, businesses are valued on their ability to generate profits and cash flow over a sustained period, not necessarily their perceived morality. The question is, does the market value sin stock companies any differently than other types of companies? Performance data and valuation metrics suggest the answer is no. Comparing companies like cigarette-makers Phillip Morris and Reynolds American to stalwarts like Procter & Gamble and Kraft Foods shows they all have enjoyed appreciating shares in recent years. They’ve also had similar price-to-earnings ratios, and strong price-to-book numbers. The market assigns valuations based on earnings and growth. Since people continue to smoke and drink during times of both recession and economic growth, sin stocks are sometimes valued at a premium compared to companies that are more sensitive to economic trends. Any negative stigma on sin stocks today tends to come from individuals who choose to avoid them. But the overall market looks favorably on the stability these companies possess. Bottom line: follow your own personal beliefs when deciding whether or not to invest in sin stocks.