Analyst suggests three gun-free funds. Ten top renewable energy stocks with their ESG and analyst stock recommendations. ESG ETFs generally outperform ‘conventional equivalents.’ ESG dividend stocks. RBC Capital ideas for the best ESG stocks. Microsoft, Nike reviewed for sustainability, profits. Analyst says avoid buying WeWork stock IPO. He blasts its financial and governance performance. More
PODCAST: Gun Free Funds, Top ESG Stocks, WeWork, and more…
Transcript & Links August 30, 2019
Hello, Ron Robins here. Welcome to my podcast Ethical & Sustainable Investing News to Profit By! for August 30, 2019—presented by Investing for the Soul. investingforthesoul.com is your site for vital global ethical and sustainable investing news, commentary, information, and resources.
Investment ideas in these podcasts are generally gleaned from market participants in the US, Canadian, UK, European, Asian and Australasian financial markets.
And, Google any terms that are unfamiliar to you.
Also, you can find a full transcript, live links and often bonus material to these podcasts at their episodes’ podcast page located at investingforthesoul.com/podcasts.
Now to this podcast!
With all the gun violence taking place in North America, it’s leading many investors to scrutinize their holdings and wanting to be rid of gun-related stocks. Well, if you’re really concerned Nitish Marwah has written an article, titled, 3 Weapon-Free Funds to Whet Your Ethical Investment Appetite. He screens outgun and related manufacturers from the Zacks Mutual Fund Ranking, and as a result, recommends:
First, The New Alternatives A Fund (Symbol: NALFX). Quoting Mr. Marweh, he says, “[the fund] invests in companies that contribute to a sustainable environment. NALFX has an annual expense ratio of 1.12%, which is below the category average of 1.30%. [And] the fund has three and five-year returns of 8.4% and 5.9%, respectively.” End quote.
His second choice is the Calvert Global Water Fund (A) (Symbol: CFWAX). Again, quoting Mr. Marweh, “The fund normally invests the majority of its assets in equity securities of domestic as well as foreign companies from the water industries or are involved in water-related service and technologies… CFWAX has an annual expense ratio of 1.24%, which is below the category average of 1.37%. The fund has three and five-year returns of 6.5% and 2.5%, respectively.” End quote.
Finally, his third pick is the Parnassus Core Equity Fund Investor Shares (Symbol: PRBLX). Mr. Marweh says about this fund, that, “the PRBLX invests in large-cap companies which have long-term competitive advantage and positive performance on ESG criteria… PRBLX has an annual expense ratio of 0.87%. The fund has three and five-year returns of 14% and 11.2%, respectively.” End quote.
Of the three funds he recommends, clearly, the Parnassus stands out as a better and lower cost performer.
My next item comes from Matthew DiLallo writing for the Motley Fool in an article titled, The 10 Biggest Renewable Energy Stocks, where he gives an overview of them.
(Incidentally, on this episodes’ podcast page I’ll have each company’s Sustainalytics or CSRHub ESG rankings – if available – and average analyst buy, sell, or hold opinions from Yahoo! Finance.)
So, the first company is:
1) NextEra Energy (NEE: NYSE) the world’s largest producer of wind and solar energy. (Rated average on ESG performance for its category and a buy average by analysts.)
2) Tesla (TSLA: NASDAQ) Mr. DiLlalo says is more than just an electric-car company. (Rated average in ESG for its category and a hold average by analysts.)
3) First Solar (FSLR: NASDAQ) focused on thin-film solar. (CSR Hub gives company high ESG marks. Yahoo! Finance shows a buy average by analysts.)
4) Brookfield Renewable Partners (BEP-UN.TO) – a leader in hydropower. (Rated average in ESG for its category and a hold average by analysts.)
5) SolarEdge Technologies (SEDG: NASDAQ) optimizes renewable energy. (CSR Hub gives company low ESG marks. Yahoo! Finance shows a buy average by analysts.)
6) Enphase Energy (ENPH: NASDAQ) is a leader in microinverters that converts DC power from solar panels into AC. (CSR Hub gives company low ESG marks. Yahoo! Finance shows a buy average by analysts.)
7) Ormat Technologies (ORA: NYSE) a leader in geothermal power. (A buy/hold average by analysts.)
8) TerraForm Power (TERP: NASDAQ) is focused on wind and solar in North America and Western Europe. (A hold average by analysts.)
9) NextEra Energy Partners (NEP: NYSE) has a strategy to generate high-powered dividend growth. (A buy average by analysts.)
And, 10) Atlantica Yield (AY: NASDAQ) which has a diversified clean energy portfolio. (A buy average by analysts.)
Again, go to this episode’s podcast page at investingforthesoul.com/podcasts for more detailed ESG and analyst opinion information.
Now, are you also looking for ESG dividend stocks? If so, you could check out this post titled, Why PACCAR is a Top Socially Responsible Dividend Stock (PCAR: NASDAQ)) by BNK Invest appearing on Nasdaq.com.
At a recent price of around $64, its dividend yield was about 1.9%. However, though BNK Invest says PACCAR has great SRI credentials, Sustainalytics on the Yahoo! Finance site rate it as a moderate ESG performer in its category. Nonetheless, it’s difficult to find a reasonably paying sustainable dividend stock so on that basis it might be ok for some investors to consider if investment income is a high priority.
A top holding in ESG funds is Microsoft. The Motley Fool writer, Tim Beyers, reviewed Microsoft (MSFT: NASDAQ) as an ESG investment in his article titled, ESG Investing: Is Microsoft a Responsible Investment?
He concludes by saying that, “While Microsoft isn’t perfect, a nine out of 10 on The Motley Fool’s ESG Compounder Checklist is a sterling result. Should efforts to improve the company’s diversity and inclusion practices continue to improve, it may not be long before we see Microsoft stick the landing alongside Accenture (NYSE: ACN), which scores a perfect 10. Keep this company on your ESG shortlist if you don’t already own shares.” End quote.
Microsoft is rated by Sustainalytics at Yahoo! Finance very high in its category average and has an average buy rating among analysts.
She says that, quote, “Nike scores an 8/10 on our ESG checklist. This is a company that has lofty goals and is intentionally striving to meet them, which we admire. We think it’s a strong ESG company with some work to do in its treatment of employees, as well as diversity and inclusion, but Nike is headed in the right direction in both of these areas.” End quote.
Sustainalytics at Yahoo! Finance rates Nike’s ESG performance a little higher than average in its category. It’s also given an average buy rating by analysts.
Now, ESG ETFs are all the rage among ethical and sustainable investors so its good to come across George Geddes’s excellent article titled Can ESG ETFs outperform? In it, he reviews ESG ETFs from around the world and how they compare with their non-ESG counterparts.
Globally he compares Deutsche Bank’s Xtrackers ESG MSCI World UCITS ETF (XZW0: L) with its non-ESG version Xtrackers MSCI World UCITS ETF (XDWD. DE). He found the ESG version outperforming the ‘regular’ version and writes that “Since the inception of XZW0, it has outperformed its benchmark across a three-month, year-to-date and one-year time frames.”
For the US, he says that “The Lyxor MSCI USA ESG Trend Leaders UCITS ETF (UESG) listed on the London Stock Exchange in May 2018 with a management fee of 0.25%, matching that of its non-screened version the Lyxor MSCI USA UCITS ETF (USAU: L). Again, UESG’s returns beat USAU’s but with a smaller margin.”
And for Europe, he writes that “Another ESG product launched by DWS [an arm of Deutsche Bank] was the Xtrackers ESG MSCI Europe UCITS ETF (XZEU: SW) which listed at the same time as its world exposed sibling. In just 15 months, the fund has pulled in over $1.7bn in assets. XZEU was an ESG version of the company’s Xtrackers MSCI Europe UCITS ETF (XMEU: GE) which launched all the way back in September 2007… [the] XMEU has performed better than the ESG version.”
These results generally appear to validate that ESG ETFs can produce returns as good – and sometimes even better – than their non ESG equivalents.
I hope all these terms didn’t confuse you. Go to this episode’s podcast page for the details.
Next item. On the Kiplinger.com site, Harriet Lefton writes a post titled, 5 Top ESG Stocks on RBC Capital’s ‘Best Ideas’ List. The companies are Salesforce.com, Nvidia, NextEra Energy (also referred to previously in this podcast), Microsoft (also referred to previously), and Gilead Sciences.
Finally, a few points considering the upcoming WeWork IPO. Apparently, at least one writer is extremely critical of the company from both a financial and governance perspective. An article from GuruFocus.com that appeared on Yahoo! Finance, says the following about the company, “Unfortunately for those hoping to buy in on a growth opportunity, WeWork shows little sign of making good on its promised profitability.” End quote.
But the real clincher, the writer says and can be seen in this quote from Stratechery, that, “The tech industry generally speaking is hardly a model for good corporate governance, but WeWork takes the absurdity [to] an entirely different level…Everything taken together hints at a completely unaccountable executive looting a company that is running as quickly as it can from massive losses that may very well be fatal whenever the next recession hits.” End quote.
I don’t yet know if any ESG ratings’ firm has rated WeWork, but irrespective of its profit prospects, on governance issues alone it may have real problems.
So, these are my top news stories and tips for ethical and sustainable investors over the past two weeks.
Again, to get all the links or to read the transcript of this podcast and sometimes get additional information too, please go to investingforthesoul.com/podcasts and scroll down to this episode.
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Now, a big thank you for listening.
Come again! And my next podcast is scheduled for September 13. See you then. Bye for now.
© 2019 Ron Robins, Investing for the Soul.