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.
[in-text-ad]
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.
Altria
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.
24/7 Wall St.Constellation Brands
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.
Constellation Brands is one the world’s largest wine companies overall and is the largest global premium wine company. Key brands include Robert Mondavi, Clos du Bois, Blackstone, Arbor Mist, Black Velvet and SVEDKA vodka. It also owns 100% of the rights to brew, market and sell Modelo’s Mexican beers in the United States.
[in-text-ad]
Constellation Brands made a gigantic $3.8 billion investment in cannabis company Canopy Growth in 2018 to increase its holdings in the company. The record investment reflects a world in which marijuana has become ubiquitous as its counterculture stigma fades and more states legalize use.
Constellation Brands stock investors receive a 1.26% dividend. The BofA Securities price target is $275, and the consensus target is $273.48. The final trade for Monday was reported at $248.74.
Diageo
One of the largest producers of alcoholic beverages in the world, Diageo PLC (NYSE: DEO) produces, markets and sells alcoholic beverages worldwide, including scotch whiskey, gin, vodka, rum, beer, Irish cream liqueurs, wine, Raki, tequila, Canadian and American whiskey, Cachaça and brandy, as well as adult beverages and ready to drink products. The company’s premium brands include Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray and Guinness.
Its reserve brands include Johnnie Walker Blue Label, Johnnie Walker Green Label, Johnnie Walker Gold Label 18-year-old, Johnnie Walker Gold Label Reserve, Johnnie Walker Platinum Label 18-year-old, John Walker & Sons Collection, Johnnie Walker The Gold Route, Johnnie Walker The Royal Route and other Johnnie Walker super-premium brands, as well as The Singleton, Cardhu, Talisker, Lagavulin and other malt brands.
Shareholders receive a 1.97% dividend. The $240 BofA Securities price target is well above the $225.54 consensus target. Diageo stock closed on Monday at $204.62.
General Dynamics
Like other major defense contractors, this submarine and tank builder looks poised to deliver solid numbers and guidance the rest of this year and perhaps beyond. General Dynamics Corp. (NYSE: GD) is engaged in business aviation, land and expeditionary combat vehicles and systems, armaments, munitions, shipbuilding and marine systems, and information systems and technologies.
Major products include Virginia-class nuclear-powered submarine and Ohio class replacement, Arleigh Burke-class Aegis, Abrams M1A2 tank, Stryker eight-wheeled assault vehicle, medium-caliber munitions and gun systems, tactical and strategic mission systems.
Top analysts expect the company to modestly beat earnings expectations and raise guidance. They also expect solid numbers from the Gulfstream division.
Investors receive a 2.11% dividend. Wells Fargo’s $282 price target is a Wall Street high. The consensus target on General Dynamics stock is $268, and shares closed at $239.18 on Monday.
[in-text-ad]
Lockheed Martin
This is another top aerospace and defense stock to buy, and it is still offering investors looking to buy shares a solid entry point. Lockheed Martin Corp. (NYSE: LMT) researches, designs, develops, manufactures, integrates, operates and sustains advanced technology systems, products and services. It also provides a wide range of defense electronics products and IT services.
Being the Pentagon’s prime contractor, Lockheed Martin offers a diverse portfolio of global aerospace, defense, security and advanced technologies. Its leveraged presence in the Army, Air Force, Navy and IT programs guarantees a steady inflow of follow-on orders, not only from the U.S. government but also from many foreign allies of the nation.
Over the past several years, Lockheed Martin’s backlog has substantially outgrown the rest of the industry, supporting the growth outlook for the foreseeable future. The company has exposure to Department of Defense priority buckets and consistently executes well. Even if the end-market growth rate slows, analysts expect continued strong fundamentals, with compounding earnings and cash flows.
Investors in Lockheed Martin stock receive a 2.51% dividend. Morgan Stanley has set a huge $521 price objective. The consensus target is $478.47, and shares closed on Monday at $442.89.
Molson Coors Brewing
While the iconic American beer company did merge with a Canadian beer giant, it is still based in Denver. Molson Coors Beverage Co. (NYSE: TAP) is one of the world’s largest brewers (more than a 3% global share) with core brands Coors Light, Miller Lite, Carling, Molson Canadian and Staropramen.
Molson and Coors merged in February 2005 and added StarBev in 2012, and it serves markets including the United States, Canada, Eastern Europe and the United Kingdom and Ireland, with exposure to other markets through its Molson Coors International division. It acquired the remainder (58%) of the U.S. joint venture (MillerCoors) in mid-October 2016.
The Coors light brand remains a huge favorite with Generation X and baby boomers, who were all around when the light beer revolution started. The company is now working on opportunities to market a cannabis-infused product.
Shareholders are paid a 2.83% dividend. The Molson Coors Brewing stock target price at Citigroup is $58. The consensus target is $56.11, and shares closed on Monday at $54.44.
[in-text-ad]
VICI Properties
This is a top pick across Wall Street in the net lease group, and it is an ideal stock for investors who are more conservative and looking for gaming exposure. VICI Properties Inc. (NYSE: VICI) is a triple net lease real estate investment trust that was spun out of Caesars Entertainment post-bankruptcy.
The company has 23 mixed-use gaming, lodging and entertainment properties in its portfolio, and a subsidiary that owns four championship golf courses. VICI also owns roughly 34 acres of undeveloped land in Las Vegas, which it leases to Caesars.
24/7 Wall St.Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
