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When I read through the business sector of the morning newspaper, I rarely see stories about stocks in the alcohol and tobacco sectors. These stocks are considered to be "sin" stocks, which some investors avoid for moral reasons. However it is unfortunate for investors that do not have moral reservations about these stocks, that they are underreported, because there are a number of stocks in the sector that have performed extremely well. This article will examine five alcohol/ tobacco stocks to see if they could help the performance of your portfolio.

Boston Beer Company (SAM) SAM has a market cap of $1.34 billion with a price-to-earnings ratio of 23.9. The stock has traded in a 52-week range between $71.00 and $105.08. The stock is currently trading around $103.91. The company reported third-quarter revenue of $134 million compared with revenue of $124 million in the third quarter of 2010. Third-quarter net income was $16 million compared with net income of $15 million in the third quarter of 2010.

One of SAM’s competitors is Heineken NV ADR (OTC:HINKY). HINKY.PK is currently trading around $23 with a market cap of $27.61 billion and a price-to-earnings ratio of 15.45. Neither HINKY.PK nor SAM pays a dividend.

SAM produces and sells alcoholic beverages and is best known for its Sam Adams beer products. The company has increased its revenue and net income in nine out of the last ten years. SAM is the largest independently owned brewer in the United States. In 2010, the company increased its revenue by 11% and its net income by 61%. The company’s stock performance has been excellent. The stock is up by 20.8% over the last 52 weeks and 242% over the last three years. The stock price has shot up 31.5% over the last two months. After such a steep run up, this stock may be overvalued, and ready for a pullback. I would not buy the stock now but would reconsider it if the stock price dipped below $90. I rate SAM a hold.

Brown Forman Inc. (BF.B) BF.B has a market cap of $11.61 billion with a price-to-earnings ratio of 20.39. The stock has traded in a 52-week range between $62.14 and $81.50. The stock is currently trading near its 52-week high at around $81. The company reported first-quarter revenue for the period ending on July 31st, in the amount of $840 million compared with revenue of $745 million in the first quarter of 2011. First-quarter net income was $118 million compared with net income of $111 million in the first quarter of 2011.

One of BF-B’s competitors is Beam Inc. (BEAM). BEAM is currently trading around $52 with a market cap of $8.14 billion and a price-to-earnings ratio of 9.04. BEAM pays a dividend, which yields 1.5% versus BF-B, whose dividend yields 1.8%.

BF-B manufactures and markets alcoholic beverages and is known for products such as Jack Daniels and Southern Comfort. The company increased its year-over-year first-quarter revenue by 12.7% and its net income by 6%. The company’s 2011year-over-year fiscal-year revenue for the period ending on April 30, was up by 6% while its net income was up by 27%. BF-B stock is also in an upward trend and is up by 12% over the last 52 weeks and 77.7% over the last three years. In the last two months, the stock price is up by 16%. The stock's last Ex-dividend date was December 2, when the dividend was increased by 9.37% to $1.40. While things looking good for BF-B, I would be careful about buying this stock. Due to the stock's two month run up, the valuation is quite high and the stock may be set for a pullback. I rate the stock as a hold but would reconsider it if the stock price dips.

Phillip Morris International (PM) PM has a market cap of $131.78 billion with a price-to-earnings ratio of 16.09. The stock has traded in a 52-week range between $55.85 and $77.03. The stock is currently trading around $76. The company reported third-quarter revenue of $20.7 billion compared with revenue of $16.9 billion in the third quarter of 2010. Third quarter net income was $7.2 billion compared with net income of $6.3 billion in the third quarter of 2010.

One of PM’s competitors is British American Tobacco Plc. (BTI). BTI is currently trading around $92 with a market cap of $91.01 billion and a price-to-earnings ratio of 18.19. BTI pays a dividend, which yields 2.6% versus PM whose, dividend yields 4%.

PM manufactures and markets cigarettes and tobacco products. The company is in an upward trend and has increased its year-over-year third-quarter revenue by 22% and net income by 14%. Investors seem to like PM’s earnings results, and have bid up the stock price by 28.9% over the last 52 weeks and 106% over the last three years. The stock price is up by 19.8% over the last two months. In addition to the rising stock price, PM’s investors have also benefitted from its rising dividend. The company began paying quarterly dividends in 2008 and since then it has increased the dividend four times by 67%. The dividend is currently $3.08. PM has been able to grow its earnings, as well as its dividend and its stock price. I rate PM a buy.

Lorillard Inc. (LO) LO has a market cap of $14.98 billion with a price-to-earnings ratio of 14.94. The stock has traded in a 52-week range between $72.40 and $120.00. The stock is currently trading around $111. The company reported third-quarter revenue of $1.6 billion compared with revenue of $1.5billion in the third quarter of 2010. Third-quarter net income was $267 million compared with net income of $274 million in the third quarter of 2010.

One of LO’s competitors is Phillip Morris USA Inc., which is a privately held Corporation.

LO manufacture and sells cigarettes. The corporation has been profitable in each of the last five years. In 2010, the company increased its year-over-year revenue by 13% and net income by 5.5%. The company began paying quarterly dividends in 2008 and since then it has increased its dividend three times by 41%. The current dividend is $3.08 with a yield 4.7%. The stock has performed very well and is up by 35.6% over the last 52 weeks and 112% over the last three years. On October 24, LO missed its third-quarter earnings per share estimates but the stock price did not get hurt. LO offers investors capital appreciation and a generous dividend income. I rate the stock a buy.

Reynolds American Inc. (RAI) RAI has a market cap of $24.09 billion with a price-to-earnings ratio of 18.20. The stock has traded in a 52-week range between $31.54 and $42.18. The stock is currently trading around $41. The company reported third-quarter revenue of $2.2 billion compared with revenue of $2.2 billion in the third quarter of 2010. Third-quarter net income was $367 million compared with net income of $381 million in the third quarter of 2010.

One of RAI’s competitors is the Altria Group Inc. (MO). MO is currently trading around $28 with a market cap of $57.96 billion and a price-to-earnings ratio of 16.89. MO pays a dividend, which yields 5.8% versus RAI, whose dividend yields 5.4%.

RAI manufacture and sells cigarettes and tobacco products. In the third quarter, the company increased its year-over-year revenue by 1% and net income by 35%. The company has been a good dividend paying company. The company has paid quarterly dividends since 1999 and has increased its dividend five times by 70% over the last five years. The stock has performed well and is up by 26.7% over the last 52 weeks and 146% over the last three years. RAI is in a slow growing company, in a mature industry. However, its stock has performed well, because the company has a recession proof product and provides consistent earnings and strong dividend income. I rate RAI a buy.

Source: 3 'Sin' Stocks To Buy, 2 To Avoid