We have seen four down weeks in a row, and the odds are things could get worse for the stock market, despite Monday’s big upside reversal. In fact, after a parabolic move higher in yields, investors piled into Treasury bonds for one reason and one reason only: they were looking for a safe haven. There’s good reason to be doing that now. It was reported that U.S. large-cap stocks saw their biggest outflow (hint: selling) since February of 2018 last week.
The reasons remain the same: staggering inflation, rising interest rates, a worsening border crisis, the ongoing and costly war in Ukraine (where once again the United States is footing the lion’s share of the bills there as we continue to pile on debt to the already $30 trillion we owe) and so much more.
One category that some portfolio managers really do not want to discuss in their portfolios is the so-called sin stocks. These are companies that sell tobacco and alcohol products, run gambling casinos, are in sex-related industries or are weapons manufacturers, and now even marijuana producers. While at the margin they do not all seem sinful, some money management companies refuse to own any of them.
We screened our 24/7 Wall St. research database for companies that fall into this rather dubious category and found seven stocks that look like outstanding values. They are all rated Buy and should hold up well even in a protracted bear market.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This maker of tobacco products offers value investors a great entry point now and has been hit as cigarette sales have slowed. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro.
Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer. In March 2008, it spun off its international cigarette business to shareholders. In December 2018, the company acquired 35% of Juul Labs, and it has purchased a 45% stake in cannabis company Cronus for $1.8 billion.
Shareholders receive a 6.48% dividend. Goldman Sachs has a $57 target on Altria stock, and the consensus target is $54.60. The stock closed on Monday at $55.23 a share.
If any company has products that stay in style, it is this one, and it has only 7% foreign sales. Constellation Brands Inc. (NYSE: STZ) is a leading global producer and marketer of beverage alcohol. Its wide-ranging portfolio spans wine, spirits and imported beer.
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