With Memorial Day around the corner, the summer season is officially beginning. For investors it’s not all barbeques and weekend getaways. Summer means sell-offs and rearranging portfolios to coincide with market movement. The stocks that tend to look appealing during these months are the vice stocks; companies that produce the very items being consumed at said barbeques and vacations. Cigarettes, alcohol, restaurants and gambling all fall into the category of sin stocks and share a tendency to outperform the overall market, especially during the summer months.
With fear of a weak end to Q2 inspiring a summer slowdown, vice stocks have another added benefit. They are recognized for being relatively stable regardless of the economic conditions. Tobacco and alcohol are especially consistent, making them an excellent defensive investment choice. Especially attractive are companies that
Phillip Morris International (PM)
The success of cigarette makers, Phillip Morris may be bad for public health but that’s not the case for stock portfolios. Morris is capitalizing on the growth markets in emerging nations and in Europe. Among consumer staples, it’s among the strongest performers. Phillip Morris controls more than 15 percent of the global marketplace for tobacco products; a fact that positions it well for the summer months where increased vice can be observed. Perhaps this also means, investors should consider investing in medical stocks in the fall.
Craft Brewers Alliance Inc. (HOOK)
Craft beers have been growing in popularity for years to the extent that many bigger companies look to purchase them. Beyond being an M& A target, the demand of craft beers for their own sake is rising, and will likely spike in the summer, as suds fans seek out the good stuff to bring to barbeques and sip out on the deck. HOOK, is one of two publicly traded craft brewing companies.
Altria Group (MO)
Altria, once affiliated with Phillip Morris also deals with tobacco products. It may be less of a buy than Phillip Morris; however, only because it focuses primarily on American distribution. In the U.S., strict bans , stigma and rising prices have all cut back on the number of smokers. In spite of this Altira, is on an upward trajectory and Americans continue to smoke at a rate of about 20 percent.
Constellation Brands Inc. (STZ)
Constellation Brands, Inc. is an international wine company with a market position in each of its core markets which include the United States, Canada, the UK, Australia and New Zealand. The company’s portfolio includes a range of premium spirit brans, from Robert Mondavi to Svedka vodka. The company had been struggling with poor credit, but appears to have bullish support with a recent credit upgrade and strong cash flow.
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