The negative press surrounding sin stocks -- companies dealing with alcohol, tobacco, firearms, or gambling -- doesn't necessarily translate into subpar returns for investors. Some great investing minds have argued that bad news tends to keep share prices artificially low, rewarding shareholders over the long run.

This week, with Altria (NYSE: MO) finally spinning off its Philip Morris International (NYSE: PM) division, and Pernod Ricard paying $8.9 billion for Swedish vodka brand Absolut, sin stocks have received front-page headlines once again -- this time without the terms "litigation" or "health risk" appearing in the same sentence.

Now's as good a time as any to give sin stocks a fresh look, with a little help from the 94,000 investors participating in Motley Fool CAPS.

Time to indulge?
Even though human beings succumb to bad habits regardless of market conditions, some sin stocks haven't been able to escape the recent market decline.


% Below
52-week High

CAPS Rating
(out of 5)

Reynolds American (NYSE: RAI)



Wynn Resorts (Nasdaq: WYNN)



Rockwell Collins (NYSE: COL)



United Breweries / Cervecerias Unidas (NYSE: CU)



Source: Yahoo! Finance as of April 1, and Motley Fool CAPS.

This type of decline in defensive stocks, especially amid recession talk, is generally music to risk-averse investors' ears. It means they can pick up stocks with steady business prospects at a discount.

Picking up a bargain-priced sin stock was the strategy of Motley Fool Income Investor co-advisor James Early, who recently recommended Santiago, Chile-based United Breweries to Income Investor subscribers. At the time, the combination of a 3.6% dividend yield, a proven defensive product line (beer, soda, etc.), and a P/E of 16 was simply too good to pass up.

Know when to fold 'em
Gambling stocks like Wynn, Las Vegas Sands (NYSE: LVS), and MGM Mirage have taken a huge hit in recent months, as investors have begun to doubt the casinos' ability to bring in gamblers during a weaker economy.

CAPS investors aren't sure whether now is the time to buy these beaten-down shares, since each has been awarded a middling three stars by the CAPS community. To figure out whether any of these three gambling stocks might be a value at today's prices, we'll consider the opinion of our All-Star CAPS investors -- those with player ratings of 80 or higher.

While it was a tight race, Las Vegas Sands garnered the most "outperform" votes from CAPS All-Stars. Let's see where the company stands today.

In a pitch from February, Sands bull zeebig cited the company's expansion into Macau, staying true to the sin-stock philosophy of betting on the weakness of mankind, regardless of the economy:

The addition of the international venues as well as the new Vegas addition have convinced me. No one ever went broke underestimating the American people, or their greed. The long term views of limited resources such as water are very valid, but until it reaches crisis level Vegas will still be a large draw.

On the other hand, back in January, Sands bear abitarecatania questioned the long-term feasibility of the city of Las Vegas itself as a gambling destination.

Las Vegas will die a slow death. Every state wants gambling revenue, so will broke Americans drive / fly all the way to Vegas or drive 20 minutes to the Indian or River Boat Casino to lose their money? ... Eventually, water, electric and food will become pricey as oil is not coming down and Las Vegas is in the middle of a NO WHERE DESERT, no water, no food near by and increased transportation costs.

Las Vegas Sands had a terrible fourth-quarter report, with profits down 65% from the previous year. The company said it ran into higher operational expenses and increased costs associated with the casinos it's opening in Macau, Singapore, and the USA.

These new casinos are huge gambles for LVS, since it issued an additional $5 billion in long-term debt to fund their construction. Whether that bet will pay off is unknown, but the timing of the wager may not have been ideal, given increasing pressure on consumer spending.

What do you think? Will Las Vegas Sands light up the market once again, or will it fizzle away in a morass of debt? Voice your opinion on this stock, or any other for that matter, on Motley Fool CAPS right now. 94,000 investors are waiting to hear what you have to say.

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Fool contributor Todd Wenning gambles only when he knows he's going to win. He does not own shares of any company mentioned. United Breweries is an Income Investor pick. The Fool's disclosure policy thinks sinners have much more fun.