Despite headwinds sin stocks look solid in 2019

There is no denying the fact that the sin industry – comprising cannabis, tobacco, alcohol and gambling sectors – is relatively undeterred by minor market pullbacks and recessions. Despite the heavy clampdown on many of these products, a steady stream of consumers and the rising demand give them enough scope for growth in 2019.

Weed: The sin industry that gained the most prominence recently was the marijuana sector, thanks to its legalization in Canada, Uruguay and later in Thailand. The US FDA also this year approved the first marijuana-derived drug, establishing a legitimate model for running the pot business.

Despite the legalization, marijuana stocks were mostly down in 2018, paring some of the gains it made in the prior two years. However, this year is likely to see the stocks soaring as companies take advantage of the acceptance it has been receiving.  According to Cowen & Co, the marijuana market is set to touch a staggering valuation of $75 billion by 2030 as more regions open up.

Stocks to watch: GW Pharmaceuticals  (GWPH), Aphria (APHA), Aurora Cannabis (ACB), Cronos Group (CRON)

Cigarette: The tobacco industry has taken the worst beating among all sin industries in 2018. There has been tough federal clampdown to bring down the usage of cigarettes, especially among teenagers. However, e-cigarettes continue to rule markets, though most flavors have been banned by the authorities.  Tobacco stocks also consistently offer high dividends, making it an irresistible bet for investors.

Stocks to watch: Altria Group (MO) had recently invested $12.8 billion in Juul Labs, which enjoys a major share of the e-cigarette market. Keep a watch on this.

Booze: Alcohol stocks were mostly down in 2018 as companies explore new drink options to cater to the changing customer preferences. A lot of consolidation has also been happening in the industry including AB InBev’s (BUD) acquisition of SABMiller. Once these volatilities settle, the industry will be able to exploit the rising trend of alcohol consumption.

Stocks to watch: Constellation Brands (STZ), Diageo (DEO)

The cannabis industry is high on deals and partnerships

Gaming: Consumer spirits are relatively high despite a slight drop in November, recent studies have found, indicating a bull run for casino stocks. Earlier this week, Macau reported 16.6% jump in December revenues, smashing past analysts’ estimates. The report had sent numerous gaming stocks including Wynn Resorts (WYNN), MGM Resorts (MGM) and Las Vegas Sands (LVS) soaring.

Stocks to watch: The Stars Group Inc (TSG), Melco Resorts & Entertainment (MLCO)

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