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Jockeys on their horses in high-speed during a race at the Caymanas Park in Portmore, St Catherine (File photo)

‘Sin’ stocks record best performance during pandemic

Jockeys on their horses in high-speed during a race at the Caymanas Park in Portmore, St Catherine (File photo)

Despite the novel coronavirus pandemic continuing to hamper global growth, including in Latin America and the Caribbean, ‘sin’ stocks are performing near or above comparative 2019 figures as more consumers turn to their products in the current, unpredictable times.

According to Investopedia, a sin stock is a publicly traded company involved in or associated with an activity that is considered unethical or immoral. Sin stocks are generally in sectors that deal directly with morally dubious actions.

Sin stocks tend to pay out nearly all their profits each quarter as dividends to shareholders with the largest owners being pension funds and other institutions which prefer stable paying investments. This also makes them some of the best dividend-yielding companies in the markets where they are listed.

Spirit and drink company Gruppo Campari reported that its Americas segment recorded a 21 per cent improvement in sales to €667.9 million ($119.6 billion) for the nine months up to September. Campari’s J Wray & Nephew subsidiary saw a 22 per cent improvement to €75 million ($13.43 billion) which outperformed the €71 million earned in the same period in 2019. Organic growth was 28.2 per cent and was largely due to Appleton Estate’s leading with 38.2 per cent growth as a premium rum.

Appleton’s special rum alongside cocktails laced with the liquor. (File photo)

The third quarter was when Jamaica experienced 12 days of full-day lockdowns as a means to combatting the rising COVID-19 cases. The Government has discontinued the use of lockdown days recently, but is still maintaining an 8:00 pm curfew.

Managing Director of J Wray & Nephew Jean-Phillipe Beyer told the Jamaica Observer in July, “Yes, we have seen an increase in sales since the curfew adjustments. This as our consumers can spend more time at point of sale (supermarket, wholesale) outlets. We have also seen where in premise accounts (bars, restaurants) are experiencing increased sales.”

The Government had revised curfew measures at the start of July and allowed the entertainment sector to operate controlled events for people who fell under certain criteria. Even with the Government clamping down in August, Heineken NV reported that beer volume year-to-date was ahead of 2019 figures for several markets in the Americas region including Mexico, the USA, Panama, Ecuador and Jamaica. This was despite organic beer volumes declining 3.4 per cent and the premium beer portfolio growing in the low-teens, led by Heineken improving 10.2 per cent. Desnoes & Geddes is the producer of Red Stripe in Jamaica.

Trinidad’s Angostura Holdings Limited which exports various spirit and alcohol-based products is also seeing its sales for the nine months of TT$613.12 million surpassing the 2019 period of TT$536.2 million. Its net profit also remains 14 per cent higher at TT$92.31 million than 2019. This is despite local sales being 5 per cent lower in the domestic market and there being no Carnival in the twin-island republic for the last two years.

Local cigarette distribution company Carreras Limited saw its revenue slightly lower at $3.43 billion for its first quarter in June against pre-COVID sales in 2019. Though its operating profit was down in the comparative periods, it paid out its largest dividend to date of $1.21 billion or $0.25 per share in June. Carreras’s stock price remains up 10 per cent year to date. Its parent company British American Tobacco plc saw its operating profit improve by 12 per cent to £4.91 billion ($1.03 trillion) despite its sales being flat at £12.18 billion.

Supreme Ventures Limited (SVL) reported in its third-quarter results that its lottery segment has generated $14.36 billion in sales year to date, which is ahead of the $13.56 reported in the same period of 2019. Its sport betting segment is also 40 per cent higher at $8.47 billion. SVL will pay out a $290.1-million dividend to shareholders later this month, which represents a 93 per cent dividend payout ratio. Even MGM Resorts International, which provides hospitality, entertainment and gaming services, has reported a 144 per cent improvement in its net profit of US$105 million compared to the second quarter of 2019. This has been bolstered by the reopening of the US economy and reduction in COVID-19 protocols.