“There is plenty of evidence that people can become addicted to technology”
Companies with robust cash flows and high profit margins tend to be the best investments – but only if they have an enduring competitive advantage to ensure they can maintain these qualities. The number of businesses with not just one but all of these qualities is tiny. But one class of company ticks all of these boxes.
The class in question is so-called sin stocks. A sin stock is generally defined as a company operating in a sector or industry that can directly or indirectly lead to addiction or, in some cases, death. These areas are generally defined as alcohol, gambling, tobacco and defence.
Some investors, understandably, like to avoid these companies for those reasons. But steering clear of stocks just because they fall into a particular sector makes no sense, and could rob investors of valuable profits.
Is booze really worse than technology?
Before I go on, I want to take a closer look at the idea of a sin stock. Diageo is one of the world’s largest alcohol businesses, and it has a major operation in the UK where it makes Scotch whisky. It pays its taxes here, is a vital source of employment in Scotland and exports these products worldwide.
Many technology firms, however, rely heavily on materials mined in Africa, which is notorious for labour abuses. Meanwhile, their products are assembled in China, which has its own
