5 Bigwigs to Watch With ESG Initiatives for Long-Term Gains
Environmental, social and governance (ESG) is increasingly turning out as a standard for modern-day stock investing. The standard tries to establish a platform for a company’s business values and ethics regarding social, environmental and corporate governance on a quantifiable metric. The metric measures the company’s goals and achievements toward its ESG initiatives.
The environmental aspects deal with the company’s policies toward climate change, net-zero carbon emissions and ecological conservation. The social standards indicate a company’s policies and attitudes toward its employees, suppliers, customers, and communities. Corporate governance aims to quantify the company’s management and leadership, pay structure, audits, internal control, and shareholders’ right.
The ESG standard is currently at its nascent stage with just a handful of companies have taken these initiatives. However, governments across the world are increasingly focusing on this standard in order to protect the environment, society and obviously investors who are dealing in risky assets like equities.
Stocks to Watch
At his stage, investment in ESG stocks should be prudent for the long-term. We have narrowed our search to five U.S. corporate behemoths that have taken solid ESG initiatives. Each of our picks carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five stocks in the past three months.
Image Source: Zacks Investment Research
Apple Inc. AAPL: The most renowned company in the world and the manufacturers of iPhone, iPAD and Mac computers is working with suppliers to reduce its environmental impact, using more sustainable materials in its products, and expanding recycling programs. AAPL has developed more energy-efficient processors, displays, and batteries and is working to improve air quality, reducing carbon emissions at its data centers, and investing in renewable energy.
AAPL has an expected revenue and earnings growth rate of 6.4% and 10.7%, respectively, for next year (ending September 2024). It has a long-term (3-5 years) earnings per share growth rate of 12.5%.
Microsoft Corp. MSFT: This undisputed leader of the global desktop/notebook market has taken initiatives to become carbon-negative by 2030 and remove its historical emissions since its inception in 1975 by 2050. MSFT plans zero waste across its direct waste footprint by 2030.
MSFT has an expected revenue and earnings growth rate of 10.3% and 11.8%, respectively, for the current year (ending June 2024). It has a long-term earnings per share growth rate of 11.7%.
NIKE Inc. NKE: This worldwide leader of designing, developing and marketing athletic footwear, apparel, equipment and accessories, and services has decided to increasingly adopt more recycled materials like recycled polyester in order to reduce 70% of its carbon footprint. By 2025, NKE aims to donate, refurbish, or recycle 10 times more used or defective products than it uses today.
NKE has an expected revenue and earnings growth rate of 5% and 15.2%, respectively, for the current year (ending May 2024). It has a long-term earnings per share growth rate of 15.3%.
Adobe Inc. ADBE: One of the largest software developers in the world targets to achieves a zero-carbon operational footprint, developing digital products with positive environmental impact. ADBE is looking for a 100% renewable energy target by 2035.
ADBE has an expected revenue and earnings growth rate of 9.7% and 14.3%, respectively, for the current year (ending November 2024). It has a long-term earnings per share growth rate of 13.3%.
eBay Inc. EBAY: A leading operator of online shopping and marketing place has set a Science-Based Target to reduce Scopes 1 and 2 greenhouse gas emissions by 90% by 2030. EBAY is committed to investing in clean energy sources, with a goal to use exclusively renewable energy.
EBAY has an expected revenue and earnings growth rate of 2.9% and 2%, respectively, for the current year. It has a long-term earnings per share growth rate of 9.7%.
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