With the markets and economy moving forward at a generally healthy rate, now doesn’t appear the ideal time to consider vice stocks to buy. After all, most analysts recommend “sin” industries during downturns and periods of uncertainty.
But the same factor that makes vice stocks so attractive during recessions — namely, their resilient demand — gives them relevancy today. Recently, President Trump made headlines when he called for the Federal Reserve to cut benchmark interest rates by 1%. Furthermore, he asked the central bankers to push more quantitative easing.
Maybe “The Donald” is merely giving himself an insurance policy prior to the 2020 election. You have to hand it to him: that’s smart thinking. On the one hand, if the economy roars into November of next year, any Democratic candidate might as well just pack it in early. But on the other hand, he also greenlighted vice stocks to buy.
Donald Trump loves gold. In fact, it wasn’t too long ago that the then real-estate mogul accepted bullion as a lease payment. Clearly, he was sending a political message about unsustainable QE. Now he’s the one requesting financial engineering. If that doesn’t send you some chills about the real health of the economy, I don’t know what will.
Maybe I’m reading too deeply into this … or maybe, you should consider adjusting your longer-term strategy. If so, here are ten vice stocks to buy:
Altria Group (MO)
Rather than one of the vice stocks to buy, Altria Group (NYSE:MO) has earned a reputation as a dumpster fire. Some of the negativity is understandable. Smoking it appears is no longer as sinfully cool as it was in prior generations. E-cigarettes and vaporizers have taken over that realm. As a result, MO stock has never really looked comfortable.
Still, I’m confident that Altria will soon establish a baseline. From there, I believe contrarian investors will see significant upside, as long as they remain patient. Here’s the deal: although broader smoking trends are declining, millennials are more likely to start the habit. According to ScienceDaily.com, a shift in youth subculture – such as delaying baby-making – facilitates living on the edge.
Cynically, this backdrop pushes MO into a viable list of contrarian stocks to buy. Additionally, you can’t overlook its 6% dividend yield.
Philip Morris (PM)
A growing consumer base among millennials also helps tobacco-rival Philip Morris International (NYSE:PM). Young Americans most likely live incredibly-stressed lives compared to older demographics who were once their age. For instance, an alarming number of millennials have used payday loans to make ends meet. Indirectly, that helps vice stocks to buy like PM.
Another factor? Companies like Philip Morris have attempted to counter the rise of vaporizers with their own alternatives. That effort just received a shot of adrenaline from the Food and Drug Administration recently. The federal agency gave the okay to PM regarding their IQOS device, which functions similarly to e-cigarettes.
Here’s why I’m specifically interested in PM stock. People who vape come in two varieties: those who’ve never smoked before, and those who are trying to kick the habit. The latter group tends to be older, and therefore, have more money. I think they’ll find IQOS more attractive, driving up revenues.
Cronos Group (CRON)
Since late February to early March of this year, cannabis firm Cronos Group (NASDAQ:CRON) experienced a noticeable downturn. Indeed, other sector players have also followed suit. Turns out, the honeymoon phase for marijuana stocks to buy has faded. Currently, investors want to see a pathway to profitability.
Eventually, they’ll get that pathway. But for now, honeymoon phase or not, it’s a time for investments and a focus on growth. That doesn’t sit well with traditional buyers, who like to see stable balance sheets and evidence of sustainability.
Of course, marijuana investments like CRON stock run short on traditional metrics. However, I think the markets must cut Cronos and others like it some slack. The industry is just going through some growing pains. However, the ultimate upside potential – such as full legalization in the U.S. – is tremendous.
Therefore, I’d take a serious look at CRON stock. This discount may not last forever.
Aleafia Health (ALEAF)
Like other speculative marijuana stocks to buy, Aleafia Health (OTCMKTS:ALEAF) is all over the map. In early February of this year, ALEAF stock more than doubled in value against the January opener. But since then, shares of the medical-cannabis firm have disappointed stakeholders. I would know. I’m one of them.
Yet I’m not discouraged because I have a longer-term outlook. Plus, I knew what I was getting into: ALEAF is among the most speculative of vice stocks to buy. It’s a feast-or-famine pick, and I take full responsibility for my choice.
That said, I wasn’t just gambling on Aleafia. As any news outlet will tell you, the U.S. is suffering a severe opioid epidemic. Largely, this occurred because big pharmaceutical companies gambled with our health. What was sold as non-psychoactive drugs were tragically anything but.
Aleafia sidesteps this problem completely with their focus on natural therapies. Therefore, I like ALEAF stock, even though it’s going through a rough spell.
Wynn Resorts (WYNN)
Las Vegas has a slogan that tells you all you need to know about it: what happens there, stays there. Unfortunately for Wynn Resorts (NASDAQ:WYNN), a lot of stuff failed to remain in place. Most notably, former Wynn Resorts CEO Steve Wynn resigned due to a scandalous sexual-misconduct allegation.
Another thing that failed to stay in Vegas? Demand. Specifically, Clark County which has jurisdiction over Sin City witnessed ever-deteriorating gaming revenue. Look, people aren’t visiting a nasty, smelly, and sweltering dump like Las Vegas for the scenery. So if gambling can’t attract tourists, nothing will.
But the bright spot for WYNN stock? Those revenues are finally returning to their former glory. Clark County’s gaming revenue hit $10.25 billion. This is the first time we’ve seen the $10 billion mark since the sub-prime lending crisis.
That bodes very well for WYNN, which is one of the more underappreciated vice stocks to buy.
Sturm Ruger & Company (RGR)
It’s either a curse or a sign of the times. Whenever I want to talk about my favorite vice stocks to buy – firearm manufacturers – something terrible happens. I’m a firm believer that guns don’t kill people; crazy people with access to whatever platform they have available kill people.
But taking aside the controversies regarding firearms-related crimes and the associated politics, I like sector players like Sturm Ruger & Company (NYSE:RGR) for purely economic reasons. As much as the left would like you to believe otherwise, Americans love guns. Not only that, the gun-buying demographic is much wider than you think.
Don’t believe me? Look what happened in California last month. A federal judge ruled that preventing Californians from buying standard and high-capacity magazines is unconstitutional. Opposing factions pressured the judge to reverse course, but not before millions of “freedom sticks” found their way into many Golden State homes.
California and other liberal states are just waiting for another black-swan event. If that occurs, watch out: firearms investments like RGR stock stand to benefit greatly.
American Outdoor Brands (AOBC)
Many years ago, I accompanied a friend who was window-shopping for a handgun. Our salesperson was exactly what you would imagine a man selling guns would look like: big, hairy, and bearded, with tattoos inked into his fists.
That wasn’t the scary part. No, it was the German Shephard and the swastika tucked away in the corner that freaked me out.
Over time, though, firearms companies realized that such imagery doesn’t really help sales. Instead, many industry players softened their image because one demographic has significantly increased their presence in the firearms space: women.
For those that don’t know, Smith & Wesson is a premiere firearms manufacturer. Better yet, women apparently love their guns, with the Smith & Wesson MP Shield chambered in 9mm ranking highly. This also makes a great Mother’s Day gift if you don’t have any other ideas…just sayin’.
Olin Corporation (OLN)
If you learned anything about the previous two companies, it’s that all Americans love guns. Men and women of incredibly-diverse backgrounds gravitate toward firearms for two principle reasons. First, America is a violent country, and police response is shockingly limited. Therefore, most people should consider taking responsibility for their own protection. The second reason? They’re fun.
To feed that fun, though, is an expensive endeavor. That’s where Olin Corporation (NYSE:OLN). OLN is a perfect pick among vice stocks to buy in that it’s not at all a seedy organization. Principally, Olin is a chemicals specialist. Without its ammunition business, OLN is a great place to grow your money with its 3.9% dividend yield.
That said, OLN owns the ammunition brand Winchester. It’s a very popular brand among firearms enthusiasts because they’re relatively cheap yet reliable. Out of 857 million firearms in the world, Americans own 393 million of them, or 46%. That’s why OLN belongs on this list of vice stocks to buy.
RCI Hospitality (RICK)
RCI Hospitality (NASDAQ:RICK) is in the hospitality business like I’m in the king crab fishing industry. While I’m sure you get excellent treatment and services at RCI’s many esteemed clubs, RICK operates the term very broadly. Of course, I wouldn’t know anything about this, but I do have a friend who visits frequently.
Alright, enough with the cheap jokes. No matter how many times our politically-correct society tries to suppress it, sex sells. It’s a dirty way to go about your marketing and advertising endeavors, but it’s just the truth. RICK stock represents escapism, fantasy, and sexuality, all rolled into one.
More importantly, this “hospitality” industry does very well during a recession. In upscale clubs, women have earned $100,000 to $300,000 annually, even during the Great Recession’s immediate aftermath. That’s a gender-pay gap that no one is complaining about!
GEO Group (GEO)
Sometimes, you’ve got to let out some steam, which is partially why the above vice stocks to buy exist. However, if you let out too much steam, you might end up on the wrong end of GEO Group (NYSE:GEO). Within the sin industry, GEO probably generates the most controversy as a private prison.
Also, it’s fair to point out that GEO stock represents the true definition of a vice investment. You might wonder how such an organization makes money. For starters, they feed government demand. GEO recently inked a deal to house foreign criminals who violate immigration laws. You think shares will rise if Trump wins another term?
Second, GEO is akin to modern-day slavery. While in their penal institutions, prisoners perform tasks for pennies on the dollar. When they’ve served their time, GEO recognizes that the recidivism rate is extremely high. Ex-prisoners are more likely to come back, bolstering the company’s revenue stream.
It’s a nasty business that preys on disenfranchised members of society. However, I can’t deny that it’s brilliant, albeit in a sick way. If you have no qualms about anything, GEO is your stock.
As of this writing, Josh Enomoto is long ALEAF stock.