Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Spooked About Recessionary Fears? Bet On Sin Stocks & ETFs

By Zacks Investment ResearchStock MarketsAug 19, 2019 01:00AM ET
www.investing.com/analysis/spooked-about-recessionary-fears-bet-on-sin-stocks--etfs-200456454
Spooked About Recessionary Fears? Bet On Sin Stocks & ETFs
By Zacks Investment Research   |  Aug 19, 2019 01:00AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The U.S. economy has been facing recessionary threats of late, thanks to global growth tensions. Bridgewater founder Ray Dalio sees a 40% probability of a U.S. recession before the 2020 election. “The yield on the 10-year Treasury note briefly broke below the 2-year rate” on Aug 14.

Though the worldwide rollout of stimulus measures helped maintain market momentum, slowdown or recession fears have still been haunting investors. While non-cyclical sectors perform well during recessionary periods, sin stocks surprisingly tend do well in such times.

What is a Sin Stock?

Per Investopedia, “a sin stock refers to a publicly traded company that is either involved in or associated with an activity that is considered to be unethical or immoral. Sin stocks are generally found in sectors that deal directly with activities are frowned upon because they are perceived as making money from exploiting human weaknesses and frailties. Sin stock sectors usually include alcohol, tobacco, gambling, sex-related industries and weapons manufacturers.”

However, along with other analysts, we also believe that not all sin industries do well in recessionary period as gambling is considered an ultra-luxury and is not likely to outperform in such times. However, areas like alcohol and tobacco have reasons to see more business. Weapon manufacturers are also likely to stay afloat as geopolitical crisis is not showing signs of abating.

How to Profit?

Against this backdrop, we highlight a few sin stocks and ETF that are likely to perform well in the coming days.

Stocks in Focus

Anheuser-Busch InBev SA/NV (NYSE:BUD)

Anheuser Busch Inbev (BR:ABI) NV (AB InBev) is a Belgium-based company engaged in the brewing industry. The company owns a portfolio of more than 200 beer brands. The stock has a Zacks Rank #2 (Buy).

GW Pharmaceuticals Plc (NASDAQ:GWPH)

GW Pharmaceuticals is a biopharmaceutical company focused on discovering, developing and commercializing therapeutics from its proprietary cannabinoid product platform in a broad range of disease areas. Investors should note that cannabis is still federally illegal. It does not have the legal status in many countries. However, its acceptance is growing in the field of medicine and consumerism. The stock has a Zacks Rank #1 (Strong Buy). It belongs to a top-ranked Zacks industry (top 21%).

Advisorshares Vice ETF (WA:ACT)

This ETF is active and does not track a benchmark. The fund provides concentrated exposure to select companies associated with alcohol, cannabis and tobacco. Cannabis-related stocks take about 28.5% of the fund, followed by 22.5% weight in alcohol, 16.5% in tobacco with cannabis exposure and 16% in restaurant and entertainment stocks. ACT has gained 13.2% this year compared with 15.2% gain of the S&P 500 and 17.8% rise of SPDR Gold Shares (NYSE:GLD).

ETFMG Alternative Harvest ETF ( (CSE:MJ) )

Marijuana can also be considered a sin or vice ETF. The underlying Prime Alternative Harvest Index enables investors to take advantage of both event-driven news and long-term trends in the cannabis industry as well as industries likely to be influenced by the medicinal and recreational cannabis legalization initiatives taking place in many locations globally. The fund is up 5.3% this year (read: Cannabis Expert Tim Seymour's Favorite Pot Stocks and ETF).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>



Anheuser-Busch InBev SA/NV (BUD): Free Stock Analysis Report

GW Pharmaceuticals PLC (GWPH): Free Stock Analysis Report

AdvisorShares Vice ETF (ACT): ETF Research Reports

ETFMG Alternative Harvest ETF (MJ): ETF Research Reports

Original post

Zacks Investment Research

Spooked About Recessionary Fears? Bet On Sin Stocks & ETFs
 

Related Articles

Spooked About Recessionary Fears? Bet On Sin Stocks & ETFs

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email