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Five Sinful Stocks For August 19

Posted: Aug 19, 2008 15:37 PM by Glenn Curtis

Tickers in this Article: PM, LMT, IGT, DEO, BA

Want to invest in a company that stands a solid chance of surviving in an economic slowdown and also fares well during good economic times? Obviously there are no guarantees; however, "sin stocks" may offer such an opportunity.

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What is a Sin Stock?
Companies that make or deal in alcohol, tobacco, pornography or weapons related products are all typically defined as "sinful companies". These types of stocks can be somewhat more sheltered from the business cycle. It doesn't matter if times are good or bad, history has taught us that people will always find money to spend on alcohol, cigarettes and adult entertainment. (To learn more, read A Prelude to Sinful Investing.)

If nothing else, adding sin stocks to one's portfolio may make it more defensive and help it weather a market downturn. Let's have a look at some of this week's top contenders:

Company	Market Cap
Boeing (NYSE:BA)	$47.0 billion
Diageo (NYSE:DEO)	$48.2 billion
International Game Tech (NYSE:IGT)	$6.8 billion
Lockheed Martin (NYSE:LMT)	$45.4 billion
Phillip Morris (NYSE:PM)	$114.1 billion
Data as of market close August 18, 2008.

Defend Your Portfolio With Boeing
The name Boeing probably conjurs up images of lumbering jumbo jets, but the company also has a strong military tradition. Memorable "sinful" aircraft include the B-52 Stratofortress bomber, the AH-64A Apache Longbow helicopter and the F/A-18 Hornet. The company is the world's No.1 aerospace company and the largest manufacturer of commercial jetliners and military aircraft combined. However, it isn’t just its sheer size that's impressive, it also sports a diverse customer base and revenue stream. It has customers in about 90 countries around the globe.

On the travel side, as businesses go global, the demand for travel related business should perk up. In addition, if our incomes climb, I would think that the demand for leisure travel would pick up as well. On the defense side of the business, the Cold War may be over, but our military still hungers for new aircraft and missile defense systems, which it also makes to fight regional conflicts and to battle terrorist organizations.

With all of that in mind, Boeing is expected to kick out some pretty decent earnings. Currently, the company is expected to earn $5.81 per share this year and $6.92 per share next year. For a company of its size (expected revenue of about $68 billion or so in 2008), and for a company that trades at about $63 and change, that's not too shabby.

Bottom Line
Sin related stocks are in no means guaranteed to generate superior market returns. However, many believe them to be a safe haven, particularly during an economic downturn. What do you think of investing in sinful stocks? Are any of these sinful stocks prudent investments, even if some may consider them socially distasteful? Join in the FREE Stock Picking Community to share your thoughts and see what other investors are saying.

If "sinful stocks" have a place in your portfolio, but you prefer mutual funds, read Socially (Ir)responsible Mutual Funds.

By Glenn Curtis

Glenn Curtis started his career in the 1990s as an equity analyst for a regional firm in New Jersey. There, he covered companies in the technology, entertainment, and gaming industries. Curtis has since worked as a financial writer at a series of both web and print publications, including TheStreet.com and Registered Rep Magazine. He has held his series 6,7,24, and 63 securities licenses.

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