As we start the fourth quarter of what has been a dreadful year for stocks, it is important for traumatized investors to remember one thing. Take a look at a long timeline chart for the S&P 500 going back 30 years. Along the way, there have been some huge financial and geopolitical ups and downs. More than once, we were on the precipice of a financial collapse: Long-Term Capital Management’s implosion, the dot-com bubble, 9/11, a global financial crisis and mortgage meltdown, the Iraq and Afghanistan wars, COVID-19 and so on. Yet, through all that, the S&P 500 still went up at more or less a 45-degree angle over time.
Remember that crisis points are generally resolved and issues, regardless of their origin, get sorted out. The current bear market will run its course. While the ultimate bottom may not arrive until next year, there are stocks that can hold up. For those with cash to put to work but who are wary of the rising interest rates, the so-called sin stocks may be the way to go.
Sin stocks are one category that some portfolio managers really do not want to discuss in their portfolios. These are companies that sell tobacco and alcohol products, run gambling casinos, or are in sex-related industries, weapons manufacture 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 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 the sole basis for any buying or selling decision.
This maker of tobacco products offers value investors a great entry point now as it 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. The stock was pounded this summer when the U.S. Food and Drug Administration announced the ban of all sales of Juul vape pens. This decision was made after government officials and public health institutes claimed that Juul is too focused on selling its nicotine products to high-schoolers. A court and the FDA granted Juul’s request for a stay on the ban, allowing the company to still sell the products while an appeal is made on the decision.
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