When economic circumstances become challenging, it’s time to get an edge, which brings us to sin stocks to buy. Yes, the sector dives into controversial arenas. However, controversies can also yield significant upside.
Certainly, the March jobs report may have provided a fire for sin stocks. You see, the U.S. economy added 303,000 jobs, yet another impressive print. Naturally, this result implies greater inflation, which has been the scourge of American households. To take the edge off the troubles, people may turn to certain adult liberties.
I know it’s not the most wholesome thesis out there. However, you know that others are likely thinking the same thing. With that, here are some tempting sin stocks to consider.
Philip Morris (PM)
Technically listed under the consumer defensive industry, Philip Morris (NYSE:PM) is better known as one of the big tobacco firms. Currently, the company’s product portfolio consists of its core cigarette business as well as its smoke-free products. The latter category includes heat-not-burn devices, vaporizers and oral nicotine products. In addition, Philip Morris manufactures consumer accessories, such as lighters and matches.
But why consider PM as one of the sin stocks to buy when global smoking rates have declined over the past several years? First, not every nation has experienced a decline. Second and more importantly, tobacco users haven’t completely kicked the practice. Instead, they have gravitated toward “digital” alternatives such as e-cigarettes. Here, Philip Morris has muscled its way into the arena, booting out smaller players.
Moreover, analysts anticipate an optimistic outing in the years ahead. For fiscal 2024, they’re looking at earnings per share of $6.40, which could rise to $7.03 in the next year. On the top line, 2024 sales could reach $37.24 billion, then rise to $39.64 billion in 2025.
Combined with a forward dividend yield of 5.64%, PM is one of the surprisingly attractive sin stocks.
Anheuser-Busch (BUD)
A couple of years ago, Anheuser-Busch (NYSE:BUD) easily represented one of the top sin stocks to buy. That’s because of one brand, Bud Light. For more than two decades, this was America’s best-selling beer. I know it wasn’t for the taste. Rather, it provided cheap entertainment, if you will. However, a controversy regarding a social media influencer got many customers angry.
Frankly, I don’t want to rehash the whole issue in part because I find the matter rather boring now. However, Anheuser-Busch paid dearly for its marketing decision. A Bud Light boycott may have cost the parent company over $1 billion in lost sales. Obviously, that’s not what you call pleasant news. At the same time, it’s also yesterday’s news.
Moving forward, analysts anticipate current fiscal year EPS to land at $3.43, up from last year’s print of $3.05. Also, revenue could rise to $62.19 billion, up 4.7% from 2023’s haul of $59.38 billion. Further, fiscal 2025 sales could jump to $64.8 billion.
Basically, people still love cheap beer. And that love should overcome partisan bickering, especially for an issue that’s blasé.
RCI Hospitality (RICK)
Everyone’s favorite idea for sin stocks, RCI Hospitality (NASDAQ:RICK) specializes in what I would term performance art facilities for gentlemen (and sometimes ladies, not that I would know or anything). Since SEO algorithms represent a matter of life and death for me, I’ll just leave the description at that. You’re free to look at the company’s hospitality website on your own time.
What I appreciate about RICK stock is the underlying relevance. Basically, this is a very old industry. And no matter what kind of technologies materialize, basic human behaviors never change. You can wager on the stability of this narrative, which makes RICK an enticing candidate for sin stocks.
It’s not just about narratives either. For fiscal 2024, analysts believe that revenue could reach just over $315 million, implying growth of 7.2% from last year. Further, in fiscal 2025, sales could really fly to $351.72 million, up 11.7% from projected 2024 revenue.
Yes, RCI suffered from disappointing earnings performances recently. However, with the job market robust, RICK stock may benefit from increased naughty behavior.
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.
