Below we share the carnal list of the Top 5 Sin Stocks to Buy Now. For our methodology and a more comprehensive list please see Top 10 Sin Stocks to Buy Now. Note that all hedge fund data is based on the exclusive group of 800+ funds tracked by Insider Monkey as part of our market-beating investment strategy.
5. Las Vegas Sands Corp. (NYSE:LVS)
Las Vegas Sands Corp. (NYSE:LVS) shares were found in the 13F portfolios of 47 hedge funds on September 30, which represents a five-year high despite the company’s throwaway 2020, which says a lot about how positively hedge funds view the casino operator’s post-Covid prospects. The hedge fund ownership trend line looks a lot like Las Vegas Sands’ revenue and EBITDA trend lines, which have steadily risen since 2017, topping out at $13.74 billion and $5.54 billion respectively in 2019.
LVS shares have gained 17% since the end of October thanks to positive developments on the coronavirus vaccine front, but remain down by over 20% this year. If there is as much pent-up demand for travel and leisure spending post-pandemic as many analysts believe, the current share price is likely to look like a huge bargain by next summer.
4. Philip Morris International Inc. (NYSE:PM)
Philip Morris International Inc. (NYSE:PM) is another quality dividend-paying tobacco stock like rival Altria Group, Inc. (NYSE:MO), which ranked seventh on this list. 50 hedge funds had the sin stock in their 13F portfolios on September 30, including First Eagle Investment Management. The fund said in its Q1 investor letter that Philip Morris’ strong balance sheet and pricing power will see it through not only the pandemic, but also the long-term transition from traditional cigarettes to newer alternatives like heated tobacco (IQOS), sales of which grew by 44% for Philip Morris last year.
3. Constellation Brands, Inc. (NYSE:STZ)
Hedge funds aren’t overly bullish on alcohol stocks, as Constellation Brands, Inc. (NYSE:STZ) is the only one to crack the top ten and even it is well off its all-time hedge fund ownership highs. 53 funds were long STZ shares on September 30, which was nonetheless good for third place on the list of top sin stocks to invest in.
Blue Hawk Investment Group discussed Constellation Brands in its Q1 investor letter, saying it bought more STZ shares as they crumbled in Q1, believing the market was misjudging the company’s exposure to closed bars and restaurants and asserting that the company is very well positioned over the short, medium, and long-term. STZ shares have fully rebounded from their Q1 swoon to post 13% gains year-to-date.
2. Raytheon Technologies Corporation (NYSE:RTX)
Raytheon Technologies Corporation (NYSE:RTX) was one of the Top 10 Stocks New Mets Owner Steve Cohen Was Buying in Q3, though numerous other hedge funds were selling off RTX during the quarter. 55 funds were long RTX shares at the end of September, down from 81 at the beginning of 2020. Those shares have slumped by 28% in 2020.
Unlike rival Lockheed Martin Corp (NYSE:LMT), Raytheon has much less exposure to military sales, which were about the company’s only bright spot during a dismal Q3 in which revenue from its Collins Aerospace and Pratt Whitney segments tumbled by 34%. Things were bleak enough that Raytheon was forced to slash 15,000 jobs earlier this year. 2021 will undoubtedly be a better year for the company however, with analysts projecting $5.5 billion in free cash flow.
1. Caesars Entertainment, Inc. (NASDAQ:CZR)
Caesars Entertainment, Inc. (NASDAQ:CZR) is far and away hedge funds’ favorite sin stock, being owned by 74 of them at the end of Q3, a 48% jump quarter-over-quarter. Hedge funds were clearly impressed by Caesars’ £2.9 billion acquisition of sports betting giant William Hill, which isn’t surprising given that many analysts felt they acquired the U.K-based bookmaker for a bargain price.
Union Gaming analyst John DeCree predicts that the pairing will be capable of generating revenue from its U.S. sports and iCasino businesses over the next two years that will be comparable to consensus estimates for DraftKings Inc. (NASDAQ:DKNG). Other analysts similarly believe that Caesars’ sports betting opportunity is being overly discounted by the market even as peers like DraftKings and Penn National Gaming, Inc (NASDAQ:PENN) have posted exorbitant gains this year.
If investing in socially responsible companies is more your thing, don’t miss our article breaking down the Top 10 ESG Stocks Al Gore’s $25 Billion Hedge Fund Is Buying.
Disclosure: None.
