Seems like ethical investing is all the rage these days however, plenty of sin-related companies (tobacco, private prisons, alcohol, guns, etc) are also fairly profitable.
Since I'm not above alpha, what are some really good 'unethical' stocks to invest in?
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First answer and it's already the best
I think I might know the answer to this but do you mind explaining why?
To name a few reasons -
Terrible for privacy
Terrible for free speech
Addictive and bad for people's mental health, especially teenagers
Intentionally makes people upset and angry to improve retention
Now they're trying to create the Matrix (metaverse) where you can be a slave in Zuck's virtual universe.
The Marijuana industry is about to blow up. I saw one HBS grad moved straight to CO to work in the biz.
Taxes are killing the industry, just look at California. Studies show people actually prefer to buy on the black market since it's way cheaper and the same quality
This is what happens in modern socialist states except for groceries and toilet paper
not only that, but I feel like it would probably turn into something like the modern beer industry, with a lot of niche small-batch growers, but a few large corporate mass producers who would be selling subpar product.
More taboo than unethical. Strongly in favor of this industry growing.
VICEX ( its underperformed for years) Friends run MJ. Good luck, not betting my money.
Altria. The stock hasn't performed great over the last 5 years (and the JUUL investment was a bad move), but the dividend yield has stayed around 7-8% for a long time and as such it is a favorite of long time dividend investors.
I haven't looked into it myself, but a lot of people on r/ValueInvesting really like British American Tobacco ($BTI), not sure which is the better name in the industry
Funny you mention them, since they are a company I follow. A pretty significant piece of my day-to-day work until very recently was rating ESG portfolios and looking at a few stocks that were repeatedly coming up as a "bad" investment in ESG terms. From an ESG perspective, I'm thinking it's going to be tough in terms of being a long term winner. However, since so many institutional investors are dumping the stock (because of ESG initiatives), it's going to be way undervalued. I just don't see a major way for it to improve its value without any institutional investors being there. Maybe some people will bet against ESG as a concept and be successful. Who knows
$RICK - operates strip clubs across the U.S. Stock has performed well.
Interesting you mention, since I think $RICK doesn't technically fall under my company's ESG blacklist, so perhaps it has made it through the cracks on my end. Saw how the stock has performed in the past and it looks solid. Did you choose to invest in it?
I wish. I've only tracked it as a joke and its my go to whenever someone asks me what stock they should buy. I used to follow it closer and management seems solid; they know the levers of the business. The first meaningful price action when it broke out of the ~$10 range was when they got legitimate bank financing across their business. Not sure what the current drivers of stock performance are.
Wow its done very well. Had no idea strip clubs were so profitable, guess it makes sense but never really thought about it.
Weirdly enough it has done fantastic in the COVID era
Strip clubs are very profitable, but RICK also make alot of acquisitions. They buy strip clubs at 6x EBITDA when they themselves have an EV/EBITDA of something like 14. It's basically arbitrage between public and private multiples. And considering the number of strip clubs in the US that run by independant owners there's a very long runaway for RICK to continue what they're doing.
$RICK is heavily fiscussed and profiled on microcabclub forums. I highly recommend looking into a subscription there to browse their forums/partake in stock conversation.
a guy on FinTwit got me on Rick and its been a solid performer
I've always wanted to start an anti esg etf.....call it "burn" or something. Basically load it up with profitable fossil fuels, defense stocks, gun stocks, private prisons, lgbt conversion therapy providers, etc etc.
Might be worth throwing a few of your coins into the $BAD ETF
https://www.bloomberg.com/news/articles/2021-12-22/bad-etf-launches-jus…
Can we address the elephant in the room here that ESG is basically just a way to siphon funds away from Republican backed companies?
It has nothing to do with "ethics" - just purely politics.
That's the free market my friend. Clearly, the US government isn't going to end their love affair with unethical companies any time soon, but people want to feel good about how they invest, so investment managers use ESG standards to fill the needs of their customers.
It's interesting how you equate poor environmental policies, negative social impacts, and bad governance with being run by Republican donors... that's really saying something...
If this is your takeaway, you're missing the point. "ESG" is just a buzzword meant to define Republican orgs as bad, not that Republican organizations are inherently bad hence my gripe with the term.
For instance, how our defense companies inherently bad? I'm definitely against unnecessary wars and think both sides are guilty of doing that (looking at you LBJ, Bush, etc.) but that doesn't make defense infrastructure bad. Any country needs that to survive. Same goes with O&G. In terms of energy consumption yes it's not as green as solar panels, but it's also more accessible for the common person and can be easily produced here in the US leading to more jobs. Guns aren't inherently bad either - it's protected in our second amendment rights. Prisons also are needed to house criminals. Too many liberals take it on themselves these days to sympathize with the criminal rather than the victim.
We've got ESG offerings and a fund that's a pure play on the military-industrial complex. (I bounced a couple changes around a few military friends back when we were looking to re-index it but nobody had data that showed Newport News as a military contractor because they break revenue down geographically. It sank the project) Compliance will have a conniption if I ever drop one of my own tickers though.
Altria, MO, in my opinion is a great value stock and certainly a sin stock. They mostly sell tobacco but have exposure to cannabis through Cronos and Alcohol through Anheuser Busch.
They pay an 8% dividend yield, are extremely low beta and actually increased sales during 2020/21 due to people stress-smoking and I think they can continue to capitalize on humanity’s desire for sin through cannabis, alcohol, tobacco, vaping (own 35% of JUUL which kinda was a flop), and smokeless products.
Prior to the pandemic revenues were declining about 1%/year. Even if we are pessimistic and assume that FCF will decline 4%/year then the stock is fairly valued where it is right now. But if it is able to keep people smoking and take advantage of new opportunities, then it is undervalued.
$TPB AND $SWMA better outlook tbh
Military-industrial corporations. I'm basically giving you shitbirds insider information (I have had like 6 military expenditure legislations come across my desk in as many months).
Amazon
I wouldn't fish in these waters. I despise the liberal push against 'sin' stocks as much as anyone else, but sustainability is actually critically important for business fundamentals LT. Businesses that are good for all stakeholders tend to see the most value creation over time so just try to hit these easier triples instead of taking risky bets on sin stocks
Facebook could be a good one to enter though IMO
I was thinking less oil, more like tobacco, weapons, adult industry/strip clubs, alcohol, etc.
$PLTR
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