Ethical or sustainable investing is all the rage right now. That sounds great, but the problem is that there is no industry-accepted definition of what constitutes an ethical investment. Ethics, by definition, is personal.

Some investors might want to avoid investing in companies that create high levels of carbon emissions. Others may have a problem with alcohol and tobacco. Some investors have to tailor their portfolio very carefully to match their religious beliefs.

Other investors really don’t care about any of this. They just want to make money.

Rightly or wrongly, sin stocks are popular. Many Americans like to drink, smoke and gamble. As an investor, having some exposure to these industries can be an attractive way to generate additional returns for your portfolio.

After all, that’s why we invest. Make money. The more restrictions you place on a portfolio, the fewer the number of investments you can choose from. This means you will have less diversification, which could lead to more risk and potentially lower returns.

Like any idea, what really matters is how you put it into action. There’s no point in simply throwing a dart at a list of stocks and hoping for the best. You need a strategy that can constantly adapt to the changing landscape.

There’s a limit to how much data we can take in ourselves, so we’re leveraging AI to do it for you. We’ll explain in more detail how we do this, but first let’s take a closer look at which industries and companies are considered stocks of sin, and how they can potentially generate significant returns for investors.

Cannabis

Cannabis stocks are one of the newest additions to the investment landscape. The first cannabis company to list on a US stock exchange was Canadian-based Cronos Group, which only listed four years ago.

Cannabis stocks have seen a huge surge in popularity, with a number of other companies following Cronos’ lead. In addition to Cronos, our AI also takes into account other major cannabis companies, including Canopy Group and Tilray.

Tilray in particular has been on the run lately. The past few years have been tough for the company, but in the past month the stock has rebounded, gaining an impressive 19.75%.

Tilray is currently a position we hold at the guilty pleasures kit, as well as Organigram, Greenlane Holdings, and cannabis real estate company Innovative Industrial Properties.

The cannabis industry is still in its infancy and many companies that are making waves in the industry are not yet making a profit. As cannabis becomes more widely accepted and legalized in the United States and around the world, there is a huge market to unlock and also potential profits for investors.

Download Q.ai today to access AI-powered investment strategies. When you deposit $100, we add an additional $50 to your account.

the tobacco

Tobacco as a business has been around for a very long time. The oldest tobacco company in the United States was the Lorillard Tobacco Company, which started in 1760 and lasted until it was acquired by British American Tobacco in 2015.

It may not be the healthiest habit, but there’s no denying that the tobacco industry is hugely profitable.

In 2018, the profits of the Big Six tobacco companies amounted to $55 billion. That’s more than the combined profits of Coca-Cola, Mondelez, Fedex, General Mills
GIS
Starbucks
SBUX
Heineken, Carlsberg, Pepsico and Nestle.

Not only that, but industry profit margins are huge, reaching as high as 71% in some markets around the world.

Companies these days are also constantly looking for ways to diversify their revenue as the health consequences of smoking are better understood and government regulations put pressure on their business model.

E-cigarettes and vaping are one of the main growth areas, along with the cannabis industry and, somewhat surprisingly, the pharmaceutical industry.

Companies our AI is looking to potentially invest in each week include Philip Morris International
PM
Altria and British American Tobacco, in which, to this day, our guilty pleasures kit figures prominently.

Love & Dating

Love sells. It’s so simple. As humans, we crave connection with other people and there are companies that have built billion dollar businesses on the back of those desires.

It’s also a surprisingly consolidated industry. Despite the ever-growing number of dating and relationship apps available, most of them are owned by a few large companies.

Matching group
MTCH
is the biggest of them all, with a market capitalization of $18 billion and a portfolio of brands including Match.com, Tinder, Hinge, OkCupid and PlentyOfFish.

There are also companies that cater to adult entertainment. Companies like Playboy and gentlemen’s club operator RCI Hospitality are stocks our AI considers for allocation to this Kit sector.

At this time, our AI is staying away from dating companies, which seems like a good move based on Match Group’s recent earnings announcement. They released their second quarter numbers on Tuesday and their stock price fell 22% on less than inspiring numbers.

Match Group’s revenues increased during the period, but at a slower pace than expected. The biggest concern was their forecast, which suggested no growth for the third quarter of 2022.

As in any industry, circumstances can change and what may not seem like an attractive investment may become one in the future. That’s why we automatically rebalance our investment kits every week.

Alcohol

The alcohol industry in the United States generated revenues of $250 million in 2021, with this figure expected to increase by 10.51% annually over the next three years. The average American spends about $750 on alcohol each year and drinks 24 gallons.

That’s big business, and that’s before you factor in the alcohol that’s exported by American companies to foreign markets.

For investors, there are a few big global players in the US market to consider.

Within the alcohol vertical, our AI considers companies such as Anheuser Busch InBev, which manufactures the popular beer brands Budweiser, Corona and Rolling Rock. Brown Forma, which makes Jack Daniel’s and Finlandia Vodka, is another on the list, along with Diageo, which is home to Johnnie Walker, Smirnoff, Captain Morgan, Tanqueray and Guinness.

Currently, our AI avoids alcohol stocks, but these positions may change weekly if there is new information.

Gambling

For anyone who has ever visited Las Vegas, the idea that the gambling industry is lucrative comes as no surprise. The gambling and sports betting industry is a cash cow, and there are many large companies generating huge revenues in this space.

One of our AI’s most prominent current positions in the Guilty Pleasures Kit is Caesars Entertainment
CZR
. The number of properties owned and/or operated by Caesars is enormous and includes Caesars, Bally’s, Flamingo, Paris and Planet Hollywood in Las Vegas, as well as dozens of other properties across the United States and Canada.

Despite a disappointing second-quarter earnings call, Caesars stock has rebounded in recent weeks and is up 16.56% in the past month.

Other casino companies in this space that our AI considers include MGM Resorts, Las Vegas Sands, Melco Resorts & Entertainmen
MLCO
t and Wynn Resorts
WYNN
. But the industry is not limited to in-person gambling at casinos.

Online sports betting and gambling has been a huge growth area for the industry in recent years, with many companies focusing solely on a digital gambling strategy. Fantasy sports and betting website Draftkings and online casino company Rush Street Interactive are examples of newcomers to the industry, having both been founded in 2012.

Finally, horse racing is another area taken into account by our AI, with companies such as Churchill Downs and Penn National Gaming.
PENN
some of the major players in this space.

How to invest in ‘Sin Stocks’

As you can see, there is a lot of money to be made in these industries, and for investors this may be an area to consider for further portfolio diversification. Not only that, but the majority of these industries have very long histories, and with human instincts unlikely to change, they’ll likely be around for a long time.

If you want to invest yourself, you can pick individual stocks, but that tends to be a risky game. There’s no way to tell if the company you’re choosing is the right one, or even if the industry you’re investing in is going to perform well.

We use AI to analyze millions of data points and then regularly rebalance the guilty pleasures kit across different verticals and companies within that industry. Sometimes liquor stocks can be a good place to be, other times cannabis stocks can be nicer.

As with any investment, the environment can change quickly. Having AI on your side means your investments are always adjusting based on the most up-to-date information.

Download Q.ai today to access AI-powered investment strategies. When you deposit $100, we add an additional $50 to your account.