Yahoo Finance Sinful stocks: Pope Francis might disapprove but your portfolio won't
The Pope is in America this week, visiting Washington DC, New York and Philadelphia. The faithful may be lining up for a glimpse of his Holiness but when it comes to Americans' investments, not all portfolios may get the Pope’s approval. Especially not the Barrier Fund (VICEX), formerly knows as the Vice Fund, which invests in ‘sinful stocks.’
Putting criticisms of making money off of human transgressions aside, the Barrier Fund has scored big gains spotting trends in less socially-conscious industries like alcohol, tobacco, weapons and gambling.
Alcohol
“Currently, right now a lot of alcohol companies have some merger mania built into them,” said Gerald Sullivan, manager of the Barrier Fund. Referring to the potential takeover of SABMiller (SBMRY) by Anheuser Busch Inbev (BUD), Sullivan thinks the bigger companies “already have their valuation built up for their distribution.”
For those reasons, the portfolio manger likes “Constellation Brands (STZ) and Brown-Foreman (BF-A) because they’re smaller, they’ve got more room to grow on the upside and they’ve got some great products.”
Tobacco
From a religious standpoint, Sullivan believes tobacco is not as bad as alcohol. Altria (MO) is a stock he favors in the space for a couple of factors. “What I like most about Altria is it has a great dividend and it doesn’t seem to be tied to the actual tobacco sales,” he said. The other reason is “ it’s a predecessor of Philip Morris (PM) and I think it’s one of the top five performers of the past 40 years,” said Sullivan. “Plus, it owns a little SABMiller left over from its Philip Morris days,” he added.
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Gambling
Another ‘do not’ under church rules is gambling and some would argue investors who dabbled in casino stocks are being punished. “It’s been a devastatingly poor sector. 50% of revenue worldwide comes from Macau gambling and the Macau casinos were targeted by the Chinese government,” said Sullivan.
But the fund manger is confident the battered industry is turning around and still bullish on “Las Vegas Sands (LVS), Wynn (WYNN) and MGM (MGM).”
Defense
“If you think of it religiously with the Trinity, you have Northrup Gruman (NOC), Lockheed Martin (LMT), and either Raytheon (RTN) or General Dynamics (GD),” said Sullivan. He said what he calls the trilogy are “three great companies, they make some of the greatest products, ultimately, they keep us safe.”
Boeing (BA) is another defense stock Sullivan holds in his fund but the aerospace company “is exposed to the economy.” He maintained, “if the worldwide economy does slow, they will have some impact long range in aircraft sales.”
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