'Good' and 'Bad' Stock Picks

Updated from 9:14 a.m. EDT

Many investors want to invest "good" in addition to investing well, meaning that they want to hold stocks in companies that are deemed socially responsible and are not involved in industries that violate their religious, moral or ethical beliefs. But other investors have no qualms about investing in companies involved in the manufacture of firearms and other weapons, cigarettes, alcoholic beverages, gambling or whose businesses may violate human rights or damage the environment -- so long as the businesses make money.

Stockpickr tracks portfolios on both ends of the spectrum -- the Vice Fund and the Ave Maria Catholic Values Fund.

Profiting From 'Vice'

First, the "bad." The Vice Fund is a long-term capital growth fund that has generated an average annual return of more than 20% over the last five years. Stocks it owns include Altria Group MO, which recently spun off cigarette manufacturer Philip Morris International PM. Altria has a forward price-to-earnings ratio of 11.6 and a P/E-to-growth ratio of 1.3. Philip Morris shares offer a forward P/E of 14 and a PEG of 1.4.

Altria stock is also owned by Moore Capital, a $10 billion group of hedge funds managed by Louis Bacon. Moore also owns shares of Dow Chemical DOW, which has a forward P/E of 12.6 and a PEG of 0.9, with a yield of 4.2%.

Another stock in the Vice Fund is Diageo DEO, a worldwide distributor of beer, wine and liquor. The company recently has been issuing press releases touting its support for initiatives to combat drunk driving and underage drinking. The stock has a forward P/E of 15, a PEG of 1.6 and a 2.5% yield.

Diageo is in the portfolio of Tweedy Browne, a $13.5 billion investment partnership that looks for companies trading at a significant discount to intrinsic value. Tweedy Browne also owns shares of Wal-Mart WMT, which has been subject to criticism due to its labor and business practices, environmental impact and treatment of product suppliers. The stock has a forward P/E of 15, a PEG of 1.4 and a yield of 1.7%.