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STOCKS
Booze, Bombs and Butts
by Ilana Polyak

Call Dan Ahrens the bête noire of socially responsible investing. Ahrens runs the two-year-old Vice Fund (symbol VICEX; 800-688-8257) ), which actively pursues companies involved in spirits, tobacco, gambling and weapons -- the kinds of stocks that socially screened funds usually avoid.

Vice stocks are ideal for uncertain times, says Ahrens: "No matter what happens in the economy, people still drink, smoke and gamble." Over the past year to October 1, the small fund racked up a sinfully good gain of 23%. Among Ahrens's favorite stocks:

Anheuser-Busch (BUD). The world's biggest beer brewer deserves a toast for consistency, says Ahrens. This year, he says, should mark its ninth straight year of higher earnings; the company has raised its dividend 28 consecutive years. Busch is looking to expand overseas. It recently acquired a Chinese brewery and penned a joint- venture agreement with Mexico's Grupo Modelo. At $51, the stock sells at 17 times the $3.03 per share that analysts expect Busch to earn in 2005, according to Thomson First Call.

Imperial Tobacco Group (ITY). Although smoking is declining in the U.S., the habit continues to grow apace elsewhere. Britain's Imperial, the world's fourth-largest tobacco company, is looking to expand its sales in Southeast Asia and Eastern Europe. In those markets, consumers increasingly prefer the cachet of its Embassy and Regal brands. Imperial is somewhat more insulated from legal risks than its U.S. counterparts, says Ahrens. Imperial, at $46, sells for 12 times forecasted earnings of $3.93 per share for the year ending next September.

Shuffle Master (SHFL). States continue to legalize gambling in an effort to close budget gaps. That means more casinos with more poker and blackjack tables -- which means big business for Shuffle Master. Over the past five years, Shuffle Master's profits grew at an annualized rate of 23%. Ahrens sees no reason why Shuffle Master can't expand along with the gambling industry. The stock, recently $36, trades at 31 times expected earnings of $1.17 per share for the fiscal year ending next October.

United Defense Industries (UDI). The war in Iraq and the fight against terrorism are boosting weapons makers. United Defense has a diversified product line, from naval guns to missile launchers. "Some contractors live and die by one large contract," says Ahrens, "but United is less subject to that." The company also generates tankfuls of cash, giving it an ample arsenal to make acquisitions. The stock trades at $39, or 14 times estimated 2005 earnings of $2.74 per share.