By Mark Hulbert, MarketWatch
CHAPEL HILL, N.C. (MarketWatch) — Avoid sin.
No, MarketWatch isn’t turning into a religious site featuring sermons with pithy titles from last Sunday.
Instead, I am simply reporting what the top performers think of “sin” industry stocks — liquor, tobacco, casinos, and fast food.
By “top performers,” I mean the group on which I focus each week in my companion service, Hulbert On Markets. The group contains those advisers on the Hulbert Financial Digest’s monitored list who have beaten a buy-and-hold in the stock market over the last 15 years. I then restrict the group even further to include just the 15 of them with the best returns over the trailing 12 months.
The table below lists all the “sin” stocks that currently are recommended by at least two of the more than 200 advisers monitored by the HFD. The stocks are segregated according to their Dow Jones industry classifications: Brewers, Distillers, Tobacco, Gambling, and Restaurants & Bars. I also show group totals for each industry; note carefully that, because I don’t list the stocks that receive just one buy recommendation from monitored advisers, these industry totals don’t necessarily equal the sum of the recommendations for the stocks actually listed.
Notice that many of these stocks receive quite a few buy recommendations from the entire group of advisers monitored by the HFD. But the majority of the stocks in the table below don’t receive even one buy recommendation from a top performer.
|Industry/Stock||# recommendations from all monitored advisers||# recommendations from “top performer” subset|
|Molson /zigman2/quotes/205165133/composite TAP||3||1|
|Boston Beer /zigman2/quotes/205338227/composite SAM||2||0|
|Companhia de. Bebidos||2||0|
|DISTILLERS & VINTNERS||7||1|
|Diageo PLC /zigman2/quotes/208129584/composite DEO||6||1|
|Philip Morris Int’l /zigman2/quotes/201611010/composite PM||11||2|
|Altria /zigman2/quotes/208895754/composite MO||8||2|
|British American /zigman2/quotes/210207837/composite BTI||2||0|
|Schweitzer-Manduit Int’l /zigman2/quotes/208081440/composite SWM||2||0|
|Vector Group /zigman2/quotes/206349225/composite VGR||2||0|
|RESTAURANTS & BARS||34||6|
|McDonalds /zigman2/quotes/203508018/composite MCD||8||3|
|Yum! Brands /zigman2/quotes/209029767/composite YUM||4||0|
|BJ’s Restaurants /zigman2/quotes/205505197/composite BJRI||3||0|
|Chiptole Mexican Grill /zigman2/quotes/200781108/composite CMG||3||0|
|Starbucks /zigman2/quotes/207508890/composite SBUX||3||0|
|Buffalo Wild Wings||2||1|
To put into perspective the low number of top-performer buy recommendations for these “sin” stocks, consider that the stocks currently most popular among these top performers, regardless of industry, are each recommended by six of them. There are two such stocks at the head of this hit parade, in fact: AT&T /zigman2/quotes/203165245/composite T -0.64% and Pfizer /zigman2/quotes/202877789/composite PFE +0.03% . In contrast, the most popular of the “sin” stocks listed in the table is McDonald’s, which is currently recommended by just three top performers — or half as popular.
And the industry (regardless of affiliation with sin) that receives the greatest number of buys from the top performers has a total of 22 such recommendations. That’s more than three times as popular as any of the “sin” industries listed in the table.
The industry that is the most popular right now among the top performers is pharmaceuticals. Might that be a reflection of the huge profits to be made treating the conditions and illnesses associated with sin?