I will admit this right now: I love sin stocks. They are reviled and probably under-owned by investors. They reliably collect their cash, shrug off criticism, adjust to regulations and march on. They often pay juicy dividends and have great pricing power. Many of these stocks represent value, hiding in plain sight.

In the space of alcohol, I like Pernod Ricard (OTCPK:PDRDY ). The company owns iconic brands such as Absolut and Chivas, and also has numerous other strong brands like Martell, Jameson, Kahlua, The Glenlivet and Malibu. The company also owns multiple local brands and 4 premium wine brands. In fact, as the article was prepared for publication, the company expanded its Brancott Estate brand with 3 new wines. The full list of all brands is here .

The company is well diversified geographically and has significant emerging markets exposure: most recently, 40% of sales came from Asia, 26% from the Americas and 33% from Europe. For the year 2013/2014, management forecasts organic growth in profit from recurring operations of between +4% and +5%.

At a current P/E of about 18, the company is not cheap, but neither is it overpriced. It currently yields about 2% and pays its dividend twice a year. In 2009, during the recession, the dividend was significantly cut but since then had rebounded nicely, with the most recent yearly increase of 10%.

Comparing the valuation of Pernod Ricard to that of BEAM can be instructive. Before BEAM was acquired, it traded at a P/E ratio of about 27 and yielded about 1.4%. Now, as it is being acquired, BEAM trades at the P/E of almost 34.

World population growth and growth of the middle class in the developing markets should provide a nice growth platform for Pernod Ricard products. Of note is double-digit sales growth in India, Africa and the Middle East. Since people have been drinking alcohol for as long as history can remember, it should continue to be a very reliable revenue generator.

The stock is owned by Thomas Russo, and represents just under 6% of his portfolio.

To paraphrase a famous saying, where there is drink, there’s smoke. No cigarette company in the world boasts brands more iconic than Philip Morris International (NYSE:PM ). Marlboro has been the world’s number one cigarette brand since 1972 and is one of the most powerful trademarks among all consumer products. Enough said.

Since 2009, Philip Morris International and Swedish Match AB (OTCPK:SWMAY ) have operated a joint venture company that has commercialized smokeless tobacco products outside of Scandinavia and the United States. Through this joint venture company, Philip Morris International sells smokeless tobacco products, including Swedish snus; the company is not shy about applying their iconic brands to these reduced-harm products.

Philip Morris International is trading at a P/E of 15.8 and is paying a 4.5% dividend. The company has been aggressively buying back its shares, and in part financed these buybacks with debt, causing an increase in leverage (somewhat of an investment risk).

International cigarette sales, where Philip Morris International operates, have had an 8.1% CAGR from 2008 to 2012 (excluding China and Duty Free sales). This was despite 0.1% cigarette volume declines in the same markets during this period. In addition, cigarette volume declines have been moderating, decreasing from 2.4% in 2010 to 0.7% in 2012. Not only that, but in 2011 and 2012 Philip Morris International grew volumes ahead of the overall market, at 0.5 and 1.3%, respectively. Such outperformance may be related to superior strength of the Company’s brands. It then comes as no surprise that the company’s share of the international cigarette market grew from 25.5% to 28.8% from 2008 to 2012.

World population growth and growth of the middle class in the developing markets should provide a growth platform for Philip Morris International products. However, recent increase in regulatory pressure does represent an investment risk.

David Winters, Thomas Russo and Ronald Muhlenkamp own large blocks of PM stock. David Winters allocated more than 10% of his portfolio to the company.

Disclosure: I am long PM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.