In this article, we will be taking a look at the 10 best sin stocks to invest in 2025.
Sin Stocks: Is Now the Time to Invest?
Sin stocks are shares of companies involved in activities that are often seen as immoral or unethical. Such companies are involved in a range of sectors such as alcohol, tobacco, gambling, and adult entertainment. Some investors believe that sin stocks profit from human weaknesses and vices. While some ethical investors may be looking to avoid such stocks due to ethical concerns, others may see them as strong investment opportunities.
It is important to note that sin stocks can offer unique benefits. By providing goods and services that people always want, companies involved in such sectors often thrive in tough times and even during recessions. Industries that may be seen as immoral or unethical like gambling, alcohol, and tobacco enjoy consistent consumer demand as people usually continue to purchase their products and services even during economic slowdowns. Some investors argue that this makes sin stocks relatively recession-proof.
READ ALSO: 12 Best Gas Stocks To Buy According to Hedge Funds and 10 Best Organic Food and Farming Stocks To Invest In.
In the US, the gambling market is flourishing. Since the Supreme Court struck down a federal law prohibiting sports betting in 2018, gambling and sports betting has grown remarkably. According to the American Gaming Association, sports betting is now legal and operational in 38 states and Washington, D.C. as of January 14, 2025. We could see more markets open up and legalize gambling and sports betting in the near future. Another key trend driving growth in the gambling industry is the surge in popularity of online gambling and iGaming. Online gambling is also attracting young bettors. According to a 2023 survey by the National Collegiate Athletics Association (NCAA), 58% of those aged 18 to 22 had placed at least one wager in 2023.
According to a report by The Business Research Company, the global alcoholic beverages market was estimated to have reached a value of $544.19 billion in 2024. The market is expected to grow at a compound annual growth rate (CAGR) of 5.4% during 2025-2029 to reach a value of $709.13 billion by the end of the forecast period. There is a growing demand for ready-to-drink alcoholic beverages and flavored drinks, especially among younger consumers. The demand for low-alcohol beverages and cocktails made with natural ingredients is also rising as consumers seek healthier options. The 2023 Bacardi Global Consumer Survey found that 44% of respondents in Canada and 43% of younger respondents in the United States plan to consume more cocktails made with natural ingredients in 2024. Additionally, consumers are increasingly willing to pay more for premium and high-quality products. This is another key trend driving growth in the alcoholic beverages industry.
Surveys in the United States have shown that the use of tobacco and marijuana has been fluctuating. Gallup, a global analytics and advisory firm, highlighted in its 2023 update on cigarette smoking that 12% of US adults were smoking cigarettes, slightly up from 11% in 2022. On the other hand, according to combined Gallup data from 2023 and 2024, 15% of US adults reported that they smoked marijuana. Since 2013, the percentage of Americans who report they smoke marijuana has more than doubled. In 2013, when Gallup added the question to its annual Consumption Habits survey for the first time, 7% of US adults reported they smoked marijuana.
Overall, industries like gambling, alcohol, tobacco, and marijuana are experiencing growth, suggesting that now might be a good time to consider investing in sin stocks.
Methodology
To compile our list of the 10 best sin stocks to invest in 2025, we looked for stocks related to gambling, tobacco, alcohol, and other businesses that fall into the category of “unethical” or “sin” stocks. We reviewed our own rankings, financial media reports, and various online resources to compile a list of the best sin stocks. Next, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 best sin stocks to invest in 2025 are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Sin Stocks to Invest in 2025
10. Constellation Brands Inc. (NYSE:STZ)
Number of Hedge Fund Holders: 36
Constellation Brands Inc. (NYSE:STZ) is an American multinational producer and marketer of beer, wine, and spirits with operations in the United States, Mexico, New Zealand, and Italy. It is one the largest wine producers in the world and one of the largest beer companies in the US. The company’s wine brands include Kim Crawford, Meiomi, Robert Mondavi, Simi Winery, Ruffino, and The Prisoner Wine Company. Its beer portfolio includes imported brands such as the Corona, Modelo Especial, Victoria, and Pacífico. Constellation Brands Inc. (NYSE:STZ) ranks among the best sin stocks to invest in according to hedge funds.
The company is strategically focused on driving growth through strategic marketing efforts. In the third quarter of fiscal 2025, which ended on November 30, 2024, STZ reported that its beer segment achieved its 59th consecutive quarter of growth in depletion volumes. This strong consumer demand for the beer portfolio was supported by incremental marketing investments that Constellation Brands Inc. (NYSE:STZ) deployed across its core brands in the quarter to address a softening economic environment that began affecting consumer spending.
Additionally, the company is focused on growing its business through capital expansion. Constellation Brands Inc. (NYSE:STZ) announced its plans to invest around $3 billion in capital expenditures from fiscal 2025 to fiscal 2028 to expand production capacity at existing facilities in Mexico and the development of a third brewery site at Veracruz.
9. Churchill Downs Incorporated (NASDAQ:CHDN)
Number of Hedge Fund Holders: 37
Churchill Downs Incorporated (NASDAQ:CHDN) is an American company that is best known for the iconic Kentucky Derby. The company has expanded its operations to include racing entertainment venues, casino gaming properties, and an online wagering company among its portfolio of businesses. As one of the best sin stocks to buy, Churchill Downs Incorporated (NASDAQ:CHDN) operates 29 regional casinos and racing properties across 14 states.
The London Company, an investment management company, has a positive outlook on CHDN. In its Q2 2024 investor letter, the investment management firm pointed out that it views Churchill Downs Incorporated (NASDAQ:CHDN) as a high-quality business led by a management team with a track record of smart capital allocation and a promising pipeline of growth opportunity. The London Company increased its investment in CHDN because of its confidence in the company’s long-term prospects.
The company is actively investing in growth opportunities to enhance its offerings and increase its market share. In October 2024, Churchill Downs Incorporated (NASDAQ:CHDN) opened The Rose Gaming Resort in Dumfries, Virginia. The destination features 1,650 historical racing machines and a 102-room hotel. Additionally, in October 2024, Churchill Downs Incorporated (NASDAQ:CHDN) announced plans to develop a historical racing machine (HRM) entertainment venue in Calvert City, Kentucky. The new facility, with an investment of $40 to $50 million, will include 250 HRMs, a sports bar and a sportsbook, and a simulcast center. The venue is expected to open in early 2026.
