Etsy, the growing online craft marketplace seen as great ESG stock. Southwest Airlines flies high on its sustainable practices. First ever ESG ‘junk bond’ ETF debuts. Seven renewable energy stock picks. Rising wind power trends of repowering and replacement of turbines offer exciting investing opportunities. New international faith-based ESG ETF launches with global appeal. More
PODCAST: Etsy, Southwest Air, ESG Junk Bonds, and more…
Transcript & Links October 11, 2019
Hello, Ron Robins here. Welcome to my podcast Ethical & Sustainable Investing News to Profit By! for October 11, 2019—presented by Investing for the Soul. investingforthesoul.com is your site for vital global ethical and sustainable investing news, commentary, information, and resources.
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Now to this podcast!
Many of you have heard of Etsy, the online craft marketplace and perhaps wondered if it’s a good ESG stock. Well, Maria Gallagher says a resounding yes to that in an article on The Motley Fool site titled, ESG Investing: Is Etsy a Responsible Investment?
She says, that, quote, “Etsy boasts more than 60 million unique items, 43 million buyers, and 2.3 million sellers on its platform… Etsy scores a 9 out of 10 on The Motley Fool’s Framework for ESG Compounders… It is a strong company that appears to strive intentionally to make its marketplace the best it can be for purveyors of handmade goods. There are areas for improvement, but Etsy seems to be balancing profitability, scale, and strong ESG principles.” End quote.
Another Motley contributor, Dan Caplinger reviews Southwest Airlines and finds it best in the airline sector for ESG practices. His piece is titled, ESG Investing: Is Southwest Airlines a Responsible Investment?
Mr. Caplinger says, “Many environmental advocates view global air travel’s enormous carbon footprint as needlessly wasteful.” But he goes on saying – and I quote, that, “Currently, Southwest helps travelers visit more than 100 destinations in the U.S. along with 10 countries internationally… and it’s No. 11 on Fortune’s list of the World’s Most Admired Companies in 2019…
Southwest has embraced ESG principles throughout its history, even before most investors paid much attention to those concepts… it’s hard to find an industry player that makes a better ESG case than Southwest Airlines… Southwest has put itself in position to thrive for years to come.” End quote.
Turning to ESG bonds, we know that generally ethical and sustainable investing bonds are of high quality – and sometimes with even lower than average yields because of their great quality. Now we have a departure from that. Nuveen – which already has 9 ESG ETFs – is launching a below investment grade ESG bond fund.
Andrea Riquier, in an article titled, The first-ever ESG junk bond ETF debuts, says this about the ETF, quote, “Investors are increasingly drawn to holdings that pay attention to ESG issues and financial-services firms are always on the hunt for new flavors of investments to offer. So, a new fund that seems to offer high yield as well as comply with ESG principles might seem attractive, even though it raises some questions about how appropriate it might be for investors.” End quote.
Among the concerns for this type of bond are that the research into their credit-worthiness is often limited as well as the number of bonds that might fit the criterion for inclusion in this ETF. Nonetheless, it might appeal to those investors willing to assume somewhat greater risk for possible greater return on their fixed income portfolio, while still wanting it to be ESG-based.
Will Ashworth, in an article titled, 7 Renewable Energy Stocks to Buy for Sunny Long-Term Returns, appearing on the Investorplace website, recommends some of the same stocks that have been covered here in previous episodes of this podcast. Here are the seven stocks he recommends, much abbreviated from his post, but using his words. Quote,
“1) NextEra Energy (NYSE: NEE) Not only is NextEra Energy the world’s largest utility, it’s also the largest producer of wind and solar energy anywhere on the planet… [its] the company’s views on energy diversity that makes it an excellent long-term investment.
2) Brookfield Renewable Partners (NYSE: BEP). Brookfield announced that it had increased its ownership (with partners) of TerraForm Power (NASDAQ: TERP) from 51% to 65%… TerraForm Power generates 3,634 megawatts of solar and wind power around the globe… Brookfield Renewable worldwide has 843 renewable power facilities… capable of producing 16,300 megawatts of power annually…
If you want to own more than renewable energy assets, you might consider Brookfield Asset Management (NYSE: BAM) which owns 61% of BEP and is one of the world’s largest alternative asset managers. If I could only own one company’s stock, Brookfield Asset Management would be at the top of my list.
3) TransAlta Corporation (NYSE: TAC). It could be better for U.S. investors to choose TransAlta Corporation as one of the best renewable energy stocks to buy rather than its 64%-owned renewable energy subsidiary TransAlta Renewables (TSE: RNW), which trades on the Toronto Stock Exchange… [Then he says] if you’re an aggressive investor, I’d go with TransAlta Renewables.
4) Enviva (NYSE: EVA) Eviva is the world’s largest producer of wood pellets… The pellets themselves are sold to utilities in the U.K. and Europe that use them in place of coal to produce a cleaner electricity source… If you’re an income investor, Enviva is a very safe way to meet your annual income requirements.
5) Renewable Energy Group (NASDAQGS: REGI) Whenever you see one of those trucks sucking out the grease traps at a restaurant, it’s going to one of Renewable Energy’s 13 biomass refineries to be turned into diesel fuel… The demand for biodiesel is tremendous… I believe REGI has got room to move into the $30s on rising demand.
6) TPI Composites (NASDAQ: TPIC) TPI Composites is the largest independent manufacturer of composite wind blades for turbine manufacturers… Last year, it announced a joint development agreement with Navistar International (NYSE: NAV) to develop a composite tractor and frame rails for a Class 8 truck… With margins moving higher, the profits will follow.
7) Siemens (OTCMKTS: SIEGY) This last one gives you exposure to a global industrial player in Siemens which, amongst its many ventures, owns 59% of Siemens Gamesa Renewable Energy (OTCMKTS: GCTAF), the world’s largest producer of wind turbines and one of the interesting renewable stocks to buy without going all-in on renewables.” End quote.
Incidentally, Travis Hoium has published an article in the Motley Fool titled, Why Solar Energy Stocks Are Dropping Like a Rock but he soothes his reader’s worries by saying, and I quote, that “Investors are afraid of solar energy right now, but the long-term prospects of the industry are improving.” End quote.
Continuing on the subject of renewable power, Maxx Chatsko says that wind power trends in the US and around the world have gained a certain level of maturity, and now some new perspectives come into focus. In an article titled, 2 Trends in Wind Power That Investors Need to Know About in The Motley Fool, Mr. Chatsko says, that “The American wind power industry is barreling toward an important inflection point. The production tax credit (PTC), which provides a subsidy for each kilowatt-hour of electricity g enerated from wind farms… is about to be phased out… The phaseout makes sense… [and that] investors interested in renewable energy stocks can’t overlook the significance of these two trends reshaping the wind power industry…” End quote.
Mr. Chatsko’s says the two big new themes at play are the repowering – or replacement – of wind farms and the recycling of old turbines. Two companies he recommends concerning these trends are General Electric (NYSE: GE) for new turbines and Trex Company (NYSE: TREX) for recycling.
For faith-based investors, America’s Inspire Investing has launched a new international ESG ETF with the name Inspire International ESG ETF (NYSEARCA: WWJD). Quoting Tom Lydon, of ETF Trends in an article he wrote titled, Inspire Investing Launches Faith-Based International ESG ETF, he says, that,
“With an expense ratio of 0.80%, the Inspire International ESG ETF is a faith-based ESG ETF comprised of 150 biblically aligned large-cap companies outside of the United States, as measured by Inspire’s revolutionary Inspire Impact Score methodology, which measures a company’s positive impact on the world… The new WWJD is comprised of 80% developed markets companies and 20% emerging markets stocks.” End quote.
So, these are my top news stories and tips for ethical and sustainable investors over the past two weeks.
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Come again! And my next podcast is scheduled for October 25. See you then. Bye for now.
© 2019 Ron Robins, Investing for the Soul.