Investors Quit Tobacco. Why Not Alcohol?

Some sin stocks seem to be easier to forgive than others. Investors’ fondness for liquor over cigarettes is a puzzle, even if it shows little immediate sign of changing.

The tobacco sector shows how quickly popular investments can sour if regulators decide to crack down on addictive consumer products. Five years ago, big cigarette stocks were trading at 19 times projected earnings on average, having generated total annual shareholder returns above 20% since 2000 — more than four times the S&P 500 average. They have since plunged and now fetch just 11 times because of the threat of stricter tobacco laws, including recent proposals to ban menthol flavors in the US


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