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.
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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.

Altria

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.
Earlier this month, the company, which at the height of its popularity dominated the market with its sweet flavors, agreed to pay $438.5 million in a settlement with 33 states and one territory over marketing its product to teens. Altria announced Friday that it is looking to end its noncompete agreement with Juul to compete more aggressively in the vape space.
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While this gets sorted out, it is a good bet that investors will still receive a giant 9.31% dividend. Deutsche Bank has a $46 target price on Altria stock, and the consensus target is even higher at $48.83. The shares closed on Friday at $40.38.

Constellation Brands

If any company has products that stay in style, it is this one, and it has only 7% foreign sales. Constellation Brands Inc. (NYSE: STZ) is a leading global producer and marketer of beverage alcohol. Its wide-ranging portfolio spans wine, spirits and imported beer.

The company is one the world’s largest wine companies overall and is the largest global premium wine company. Key brands include Robert Mondavi, Clos du Bois, Blackstone, Arbor Mist, Black Velvet and SVEDKA vodka. It also owns 100% of the rights to brew, market and sell Modelo’s Mexican beers in the United States.

Constellation Brands made a gigantic $3.8 billion investment in cannabis company Canopy Growth in 2018 to increase its holdings in the company. The record investment reflects a world in which marijuana has become ubiquitous as its counterculture stigma fades and more states legalize use.

Investors receive a 1.39% dividend. The J.P. Morgan price target is $287, while the consensus for Constellation Brands stock is $274.71. The final trade for Friday was reported at $229.68.

Diageo

Another of the largest producers of alcoholic beverages in the world, Diageo PLC (NYSE: DEO) produces, markets and sells alcoholic beverages worldwide, including scotch whiskey, gin, vodka, rum, beer, Irish cream liqueurs, wine, Raki, tequila, Canadian and American whiskey, Cachaça and brandy, as well as adult beverages and ready to drink products. The company’s premium brands include Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray and Guinness.

Its reserve brands include Johnnie Walker Blue Label, Johnnie Walker Green Label, Johnnie Walker Gold Label 18-year-old, Johnnie Walker Gold Label Reserve, Johnnie Walker Platinum Label 18-year-old, John Walker & Sons Collection, Johnnie Walker The Gold Route, Johnnie Walker The Royal Route and other Johnnie Walker super-premium brands, as well as The Singleton, Cardhu, Talisker, Lagavulin and other malt brands.

Shareholders receive a 2.24% dividend. The $206 BofA Securities price target is less than the $213.85 consensus target, but Diageo stock closed at $169.81 a share on Friday.

General Dynamics

Like other major defense contractors, General Dynamics Corp. (NYSE: GD) looks poised to deliver solid numbers and guidance the rest of this year and perhaps beyond. It is engaged in business aviation, land and expeditionary combat vehicles and systems, armaments, munitions, shipbuilding and marine systems, and information systems and technologies.
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Major products include Virginia-class nuclear-powered submarine and Ohio class replacement, Arleigh Burke-class Aegis, Abrams M1A2 tank, Stryker 8-wheeled assault vehicle, medium-caliber munitions and gun systems, tactical and strategic mission systems.

Top analysts expect the company to modestly beat earnings expectations for the third quarter and possibly raise guidance. They also expect solid numbers from the Gulfstream division.

General Dynamics stock comes with a 2.38% dividend. Wells Fargo’s price target of $249 compares with a $263.94 consensus target and Friday’s close at $212.17 per share.

Lockheed Martin

This is another top aerospace and defense stock to buy, and it still offers investors looking to buy shares a solid entry point. Lockheed Martin Corp. (NYSE: LMT) researches, designs, develops, manufactures, integrates, operates and sustains advanced technology systems, products and services. It also provides a wide range of defense electronics products and IT services.

Being the Pentagon’s prime contractor, Lockheed Martin offers a diverse portfolio of global aerospace, defense, security and advanced technologies. Its leveraged presence in the Army, Air Force, Navy and IT programs guarantees a steady inflow of follow-on orders, not only from the U.S. government but also from many foreign allies of the nation.

Over the past several years, Lockheed Martin’s backlog has substantially outgrown the rest of the industry, supporting the growth outlook for the foreseeable future. The company has exposure to Defense Department priority buckets and consistently executes well. Even if the end market growth rate slows, continued strong fundamentals can be expected, with compounding earnings and cash flows.

The dividend yield here is 2.90%. Morgan Stanley has set a $522 price objective. The consensus target is lower at $459.79, and Lockheed Martin stock closed on Friday at $386.29.

Molson Coors Brewing

This iconic American beer company did merge with a Canadian beer giant, but it is still based in Denver. Molson Coors Beverage Co. (NYSE: TAP) is one of the world’s largest brewers (more than a 3% global share) with core brands Coors Light, Miller Lite, Carling, Molson Canadian and Staropramen.
Molson and Coors merged in February 2005 and added StarBev in 2012, and it serves markets including the United States, Canada, Eastern Europe and the United Kingdom and Ireland, with exposure to other markets through its Molson Coors International division. It acquired the remainder (58%) of the U.S. joint venture (MillerCoors) in mid-October 2016.
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The Coors light brand remains a huge favorite with Generation X and baby boomers, who were all around when the light beer revolution started. The company is now working on opportunities to market a cannabis-infused product.

Shareholders receive a 3.17% dividend. Molson Coors Brewing stock has a $66 price target at Jefferies. The consensus target is $56.59, and the stock closed on Friday at $55.66.

VICI Properties

This top pick across Wall Street is an ideal pick for investors who are more conservative and looking for gaming exposure. VICI Properties Inc. (NYSE: VICI) is a triple net lease real estate investment trust (REIT) that was spun out of Caesars Entertainment post-bankruptcy.

The company has 23 mixed-use gaming, lodging and entertainment properties in its portfolio, and a subsidiary that owns four championship golf courses. VICI also owns roughly 34 acres of undeveloped land in Las Vegas, which it leases to Caesars.

Much of the focus has been on VICI’s recent deal to acquire the real estate of the Venetian Resort in Las Vegas, with Apollo as a new tenant. Looking ahead, many on Wall Street are very positive on VICI’s embedded growth pipeline with Caesars Entertainment, including a put/call on the Centaur properties in Indiana (starting in January) and a right of first refusal on a strip asset sale for Caesars, which could occur soon after a full earnings before interest, taxes, depreciation, amortization and restructuring or rent costs recovery.

VICI Properties stock investors receive a 5.23% distribution. The Truist Financial price target of $40 is higher than the $37.88 consensus target. Shares closed at $29.85 on Friday.

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Of course, nobody should invest in something they personally oppose. However, for investors not bothered by these industries, their stocks may have solid portfolio potential, and even if the economy gets very rocky, they are likely to hold their own. With the current market wobbling, it may make sense to shift some dollars to these solid companies.

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