In an age where environmental, social and governance (ESG) directives are consistently being pushed, the concept of sin stocks to buy might appear anachronistic. Nevertheless, those investors who want to indulge in certain enticing opportunities may be looking at a viable upside pathway.
For one thing, humans are humans. In the U.S., people don’t like to be told what to do, whether that’s from the government or some thinktank. This rebellious spirit may, in a counterintuitive manner, bolster sin stocks to buy as anti-ESG plays. Just because something has gone mainstream doesn’t necessarily mean that everyone’s on board with the initiative.
Second, this titillating market sector has a cynical basis attached to it: people are motivated for lack of a better word to consume the product or service. That could be a very powerful catalyst, especially in this challenging economic cycle. With that, below are tempting sin stocks to buy.
Vector Group (VGR)
Based in Miami, Florida, Vector Group (NYSE:VGR) technically falls under the consumer defensive sector. That could be your excuse to justify why you’re buying a tobacco company for your portfolio. According to its public profile, Vector produces cigarettes under various brand names and private labels. It also invests in planned communities, condominiums and mixed-used developments.
Fundamentally, a key criticism regarding the tobacco industry is the falling global smoking prevalence rate. However, it remains a popular activity among those who enjoy the practice. And yes, on an extremely cynical basis, it’s difficult to quit (which is why you shouldn’t start). I don’t want to sound cold but that’s good for business.
Notably, Ian Zaffino of Oppenheimer rates VGR stock a “buy” with a $16 price target. That implies a robust upside, dismissing the notion that cigarette companies are irrelevant.
On a trailing-12-month (TTM) basis, Vector’s net income lands at $178.63 million on revenue of $940.42 million. For fiscal 2024, earnings per share may rise to $1.28 on sales of $1.43 billion. It’s one of the surprising sin stocks to buy.
RCI Hospitality (RICK)
Based in Houston, Texas, RCI Hospitality (NASDAQ:RICK) falls under the consumer cyclical umbrella, specifically under restaurants. Now, before you think you’re about to walk into an Applebee’s, RCI specializes in the performance arts. I really don’t want to dive into any more details in a bid to avoid upsetting the algorithm overlords. Suffice to say, you should not visit the website for “research” because no one would believe you.
Fundamentally, RICK could be an interesting play for sin stocks to buy based on historical trends. I mean, history doesn’t always repeat but it ends to rhyme. In this case, “performance arts” centers thrived during the Great Recession. People (generally those who identify as male) enjoyed a respite from their troubles. The same could happen in this challenging economic cycle.
H.C. Wainright’s Scott Buck recently rated RICK a “buy” with a $98 price target. That’s a massive forecast which implies a continuation of the aforementioned historical trends.
For fiscal 2024, top-line growth may be modest at 1.3%. However, fiscal 2025 could see a 7.5% growth from projected 2024 sales to $319.92 million.
Anheuser-Busch (BUD)
Arguably one of the classic cases for sin stocks to buy, Anheuser-Busch (NYSE:BUD) has seen better days. Prior to a controversy involving a social media influencer, Anheuser’s Bud Light brand represented America’s favorite beer. Unfortunately, this decades’ long track record slipped (it fell to number two) because a marketing campaign offended conservative customers.
Previously, I thought that the ill feelings would soon fade. After all, anger is a difficult emotion to sustain, especially when the offending enterprise backed off from the controversial messaging. However, it appears that Bud Light sales are still suffering one year past the controversy. So, why is BUD one of the sin stocks to buy?
Frankly, a challenging economic environment might cause customers to come back to their first love (so to speak). Bud Light is cheap and for whatever reason, it resonates with the American palate. Therefore, financial incentives should bring the lager brand back to the top spot.
Notably, analysts rate shares a consensus strong buy with a $74.88 average price target. Further, the high-side target hits $80.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.