Consider These Top ESG Stocks! ESG fund ownership offers great insight into the best stocks to own for potential returns.

Transcript & Links, Episode 143, November 29, 2024

Hello, Ron Robins here. Welcome to this podcast episode 143 published November 29, 2024, titled “Consider These Top ESG Stocks!” It’s presented by Investing for the Soul. Investingforthesoul.com is your site for vital global ethical and sustainable investing mentoring, news, commentary, information, and resources.

Remember that you can find a full transcript and links to content – including stock symbols and bonus material – on this episode’s podcast page at investingforthesoul.com/podcasts.

Also, a reminder. I do not evaluate any of the stocks or funds mentioned in these podcasts, and I don’t receive any compensation from anyone covered in these podcasts. Furthermore, I will reveal any investments I have in the investments mentioned herein.

Additionally, quotes about individual companies are brief. Please go to this podcast’s webpage for links to the articles and more company and stock information.

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Consider These Top ESG Stocks! (1)

I’m beginning this podcast episode with a great article titled The Top Stocks Widely Owned by ESG Funds. It’s by Frances Aufderheide and found on morningstar.com. Here are some quotes from the article.

“We found five stocks owned exclusively by large-cap sustainable funds in the industrials, materials, and healthcare sectors. We describe them below, with insight from Morningstar analysts and Sustainalytics.

Source: Morningstar Direct. Weights as of Oct. 31, 2024. Data as of Nov. 5, 2024.

1. Ecolab (ECL)

Morningstar Rating: 2 Stars

Morningstar ESG Risk Rating Assessment: 3 Globes

Price/Fair Value: 1.14

Total Return Year to Date (Month-End): 24.75

‘As the global leader in the cleaning and sanitation industry, Ecolab provides products that help its hospitality, foodservice, and life-sciences customers do laundry, wash dishes, maintain clean manufacturing environments, and ensure regulatory compliance. With unmatched scale and a solid razor-and-blade business model, Ecolab’s competitive advantages are firmly in place.’

‘Ecolab’s largest growth driver over the next decade will be the water business, which generates the majority of revenue in the industrial segment. During the quarter, water revenue grew 3% versus the prior-year quarter on an organic basis, excluding currency movements.’

—Seth Goldstein, Morningstar Strategist

2. Agilent Technologies (A)

Morningstar Rating: 4 Stars

Morningstar ESG Risk Rating Assessment: 4 Globes

Price/Fair Value: 0.91

Total Return Year to Date (Month-End): (5.76)

Agilent provides instruments, software and services for laboratories.

‘Agilent offers differentiated technology that is protected by various intangible assets, including patents, copyrights, and trademarks. This portfolio of intellectual property and its innovation prowess in chosen fields keep competitors from directly copying its technology.’

—Julie Utterback, Morningstar Senior Equity Analyst

3. Xylem (XYL)

Morningstar Rating: 3 Stars

Morningstar ESG Risk Rating Assessment: 3 Globes

Price/Fair Value: 1.07

Total Return Year to Date (Month-End): 7.43

‘Xylem is one of the leading water technology companies in the world. Its extensive portfolio spans a wide range of equipment and solutions for the water industry, including the transport, treatment, testing, and efficient use of water for public utilities as well as industrial, commercial, and residential customers. Xylem operates four business segments: water infrastructure, applied water, measurement and control solutions, and water solutions and services.’

—Krysztof Smalec, Morningstar Equity Analyst

4. W.W. Grainger (GWW)

Morningstar Rating: 1 Star

Morningstar ESG Risk Rating Assessment: 4 Globes

Price/Fair Value: 1.66

Total Return Year to Date (Month-End): 34.57

W.W. Grainger distributes maintenance, repair, and operations products to more than 4.5 million customers.

‘We’ve raised our fair value estimate for narrow-moat-rated Grainger by 12% to $660 per share as we’ve become more confident of the firm’s ability to maintain long-term operating margin above 14%. Even so, the current stock price remains well above our revised fair value estimate.’

‘Our confidence (of a narrow moat) is rooted in Grainger’s ability to fend off competitive pressures from both new and existing players in the maintenance, repair, and operations market.’

—Brian Bernard, Morningstar Senior Director

5. Veralto (VLTO)

Morningstar Rating: None

Morningstar ESG Risk Rating Assessment: 3 Globes

Total Return Year to Date (Month-End): 24.56

Veralto provides technology solutions to improve the quality and reliability of water and product innovations through a suite of brands.

‘This tax-free spinoff is just the latest example of Danaher’s business pruning.’

—Julie Utterback, Morningstar Senior Equity Analyst”

End quotes.

Also, go to the link on this podcast page to this article for additional research on the “Top 10 widely held in US Sustainable Large-Cap Fund Universe” and “Top 5 Overweight Securities in the US Sustainable Large-Cap Fund Universe”.

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Consider These Top ESG Stocks! (2)

The second article today reviews a company that is an old favorite of ethical and sustainable investors. The article is titled Buy First Solar Stock on the Dip. Solar Energy Will Be Too Good an Opportunity for President-Elect Trump to Pass Up. It’s by James Brumley and found on fool.com.

Here are a few of his comments on First Solar stock.

“First Solar (FSLR)

Investors suspect pro-oil President-elect Donald Trump could also prove unsupportive of renewable energy. In fact, most clean energy stocks are down since his Nov. 5 election on this very worry. First Solar has been no exception to the industrywide sell-off.

This weakness, however, is also a buying opportunity for anyone interested in owning a piece of the solar panel maker, or in adding exposure to the solar industry as a whole. The solar power movement is too big and too well-developed for Donald Trump to bring to a halt now.

First Solar is also well-positioned to sidestep one of the few meaningful actions the president-elect could take to disrupt the solar industry’s growth.

Solar is just too competitive to stop now

Data gathered by Wood Mackenzie and reported by the U.S. Department of Energy indicates that utility-scale solar power is now in line with the cost of natural gas and coal-fired power…

The irony? Largely because it’s the cheapest means of adding utility-scale power production there, solar is growing like wildfire in several states like Texas, Oklahoma, and Kansas that picked Trump to be president during the recently ended election cycle. To the extent voters picked Trump for economic reasons, they’ll certainly appreciate cheaper electricity and its positive impact on the economy.

The 2022 passage of the Inflation Reduction Act is admittedly fueling much of this growth, by offering taxpayers a tax credit of up to 30% of the cost of a solar power system. The IRA also incentivizes utility-scale solar power projects as well as the manufacturing of solar panels themselves…

But tariffs? While unspecific as well as far from being certain (Trump argues the mere threat of tariffs is enough), First Solar is mostly immune to their impact anyway. Although the company requires some imported materials that may be subject to such tariffs, it’s an American manufacturer mostly serving the North American market, where the company believes over 90% of its immediate revenue opportunities await…

Data source: StockAnalysis.com. Chart by author.

Give at least partial credit for this brewing growth to First Solar’s Cadmium Telluride (CdTe) photovoltaic panels. Although they make its design and production processes more complicated and more costly than that of more conventional silicon panels, this technology proves more durable while at the same time delivering more power. Utility-scale buyers are increasingly seeing these high-performance panels as an investment rather than an expense, as they further lower the effective per-kilowatt cost of solar power…

The market’s overestimating the risk, and underestimating First Solar

Now all of a sudden First Solar’s stumble since early November and its much bigger 37% pullback from June’s peak looks like an entry opportunity.

The analyst community agrees, anyway. Undeterred by political rhetoric and handwringing, most of them still consider First Solar stock a strong buy, sporting a consensus price target of $280.79. That’s almost 50% above the stock’s present price.”

End quotes.

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Consider These Top ESG Stocks! (3)

This next article, though from Australia, might interest many investors outside of that wonderful country. It’s titled The Ethical Investor: These three ESG award-winning ASX companies show how it’s done. It’s by Eddy Sunarto found on ntnews.com.au. Here are some of what Mr. Sunarto says about his picks.

“1. Orica (ASX:ORI)

was named Australia’s most sustainable company in the 2024 Australian Financial Review Sustainability Leaders awards, taking home top honours for its significant environmental impact.

The company, a global leader in commercial explosives, was recognised for its groundbreaking emissions abatement project at its Kooragang Island plant near Newcastle, NSW.

This project is the largest of its kind in the Australian chemicals sector, reducing emissions by 45% at the site and cutting national chemical industry emissions by 11%…

The judges believe Orica’s efforts have not only addressed environmental challenges but have also driven economic growth, injecting millions into the local economy while future-proofing critical manufacturing capabilities for industries such as mining, agriculture and healthcare.

The company’s commitment to sustainability is also reflected in its ambitious climate targets, aiming for net zero emissions by 2050.

2. Sims Metal Management (ASX:SGM)

an Australian-based global recycling company with a 106-year history, was named the most sustainable corporation of 2024 by Corporate Knights, topping its Global 100 list.

Known for its role in the circular economy, Sims has been integral in reducing carbon emissions by recycling metals like steel, copper, and aluminium – which are crucial in industries like electric vehicles, wind turbines and solar panels.

In 2023 alone, the company’s efforts saved 13 million tonnes of CO₂, equivalent to removing nearly three million cars from the road, according to its reports.

Sims’ approach to sustainability extends beyond recycling, with ambitious goals to transition to renewable energy in its operations by 2025 and achieve net-zero emissions by 2050…

The company is investing in advanced technologies, like automated sorting systems and AI robots, to improve the efficiency of its recycling processes.

Although these innovations may not always attract the same attention as large renewable energy projects, CEO Stephen Mikkelsen said that metal recycling plays a vital role in decarbonising industries and contributing to a sustainable future.

3. Australian Vintage (ASX:AVG)

won the 2024 Global Drinks Intel ESG Award for Sustainable Wine Producer, which was announced in September.

The award recognised the company’s strong commitment to environmental, social, and governance (ESG) principles, despite current challenges within the Australian wine industry.

The company had earlier achieved B Corp certification in February, making it one of only three Australian wine companies with this status.

Australian Vintage’s ESG strategy focuses on three key pillars: ‘Thriving People’, ‘Nurture Nature’, and ‘Meaningful Growth’.

The company said all these are supported by measurable, verifiable performance…

The judges praised Australian Vintage for not just making ESG commitments, but for quantifying and achieving real, impactful results.”

End quotes.

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Additional Articles of Interest

1. Title: The Top 10 Nuclear Energy Companies Shaping Clean Power on vaneck.com. By Coulter Regal.

2. Title: How to Get Fossil Fuels Out of Your Investment Portfolio on nytimes.com. By Tara Siegel Bernard.

3. Title: Raymond James Predicts Up to ~440% Rally for These 2 ‘Strong Buy’ Stocks on finance.yahoo.com. By TipRanks.

4. Title: Top 10: Sustainable Brands on sustainabilitymag.com. By Jasmin Jessen.

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Ending Comment

These are my top news stories with their stock and fund tips for this podcast “Consider These Top ESG Stocks!”

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Now my next podcast will be December 13^th.

I’ll talk to you then!

Bye for now.

© 2024 Ron Robins, Investing for the Soul