Interest in value-aligned and impact investing is growing fast. According to FINRA, 15 million private US investors already make investment decisions based on financial return coupled with positive impact.
The numerous investment opportunities that are great for investors’ wallets as well as the planet have dispelled the popular misconception that investments with positive impact come with a drag on return. Institutional investors weren’t fooled for long. They began piling into impact investing years ago.
Outperformance
There is a growing mountain of evidence of the strong correlation between good corporate stewardship and long-term investment returns. Independent studies by MSCI and Vanguard have found that companies that score highly on environmental, social and governance issues tend to outperform.
Huge opportunities abound. Take the the urgent need to address climate change as an example. It has spurred a wave of government investment and quest for innovative solutions. These massive, multi-decade developments are producing huge opportunities in renewables, energy efficiency, green buildings, waste management, agriculture, to name just a few. There’s a high chance that the next Nvidia (NVDA 📈) will originate from this opportunity set.
3 good reasons to select stocks for return and positive impact
Investing for return coupled with positive impact is a good strategic choice for any investor. Here are three good reasons:
1. Return potential
Empirical research shows that strong corporate stewardship with respect to environment and social issues generates outperformance.
2. Risk management
Selecting companies with a strong, long-term perspective is a great way to minimize portfolio risk. These companies excel at identifying risks, as well as structural opportunities.
3. Positive impact
It’s hard to argue against positive impact. Positive impact creates satisfied customers and users for any company. It’s just good business.
The top 5 stocks for return and impact right now
Our research team selected the following five stocks for our shortlist of the top 5 stocks for return and impact.
5. Waste Connection – WCN 📈
Keep on reading to learn what makes these stocks stand out.
First Solar FSLR 📈
Ziggma Score: 97
2024 Price/Earnings: 15.6x
2024 Projected profit growth: 75%
First Solar provides photovoltaic (PV) solar energy solutions in the United State, Japan, France, Canada, India, Australia, and internationally. The company designs, manufactures, and sells cadmium telluride solar modules that converts sunlight into electricity. First Solar is headquartered in Tempe, Arizona.
Why FSLR is attractive
We like First Solar for a number of reasons. If you follow us on Twitter or Stocktwits you will have seen us post on the stock when it was as low as $140. Still at this price FSLR’s stock is inexpensive given its growth profile. The tarifs that are in the works on Chinese solar stand to benefit the company. Clean power through solar stands to benefit from structural growth for decades to come. With over $1.5 billion in cumulative R&D investment, First Solar continues to innovate and lead in solar technology.
Stride – LRN 📈
Ziggma Score: 97
2024 Price/Earnings: 15.6x
2024 Projected profit growth : 54%
Stride is a technology-based education company. It provides proprietary and third-party online curriculum, software systems, and educational services to facilitate individualized learning for students primarily in kindergarten through 12th grade (K-12) in the United States and internationally. It also provides career learning products and services that are focused on developing skills to enter in industries, including information technology, health care, and business. Skills training for data science, software engineering, healthcare, and medical fields is provided to adult learners under Galvanize, Tech Elevator, and MedCerts brand name. Stide is headquartered in Herndon, Virginia.
Why LRN is attractive
Stride’s Price to Earnings Growth ratio is below 1. This suggests a particularly attractive price for the company’s growth prospects. Although online education does not benefit from high barriers to entry, Stride still stands to be powered by the education industry’s growth dynamics. In an ever-increasingly competitive world,education empowers all people, especially in Stide’s sweetspot of young students.
Adobe – ADBE 📈
Ziggma Score: 89
2024 Price/Earnings: 26.8x
2024 Projected profit growth : 53%
Adobe is a leading global software company renowned for its products used in graphic design, video editing, web development, and digital marketing. It offers a comprehensive suite of creative software, including Photoshop, Illustrator, and Premiere Pro, primarily through its Adobe Creative Cloud subscription service. Adobe also provides solutions for digital document management with Adobe Acrobat and Adobe Sign. Furthermore, its Adobe Experience Cloud delivers tools for marketing automation, analytics, and e-commerce, empowering businesses to create and optimize customer experiences.
Why ADBE is attractive
Adobe is not only a leader in creative software but also a pioneer in corporate sustainability. The company has achieved global gender pay parity and is on track to source 100% renewable energy by 2035.
After a drop of 23% since end of January, Adobe’s stock looks once again attractively priced. Analyst certainly think so. The consensus price target is 30% above the current stock price.
Medtronic – MDT 📈
Ziggma Score: 83
2024 Price/Earnings: 16.5x
2024 Projected profit growth : 53%
Medtronic develops, manufactures, distributes, and sells device-based medical therapies to hospitals, physicians, clinicians, and patients worldwide. It operates through four segments: Cardiovascular Portfolio, Neuroscience Portfolio, Medical Surgical Portfolio, and Diabetes Operating Unit.
Why MDT is attractive
Medtronic ranks first amongst the top 10 global medical companies and has well over 5% market share. The company possesses as many as 49,000 patents. Its product portfolio is very well diversified between cardiovascular (36%), minimally invasive (29%), restorative (27%) & diabetes (8%) therapies.
With a P/E ratio of 16.5x, MDT’s stock is quite reasonably priced given the company’s earnings growth profile. Medtronic’s net positive impact is best summarized by the fact that its products have improved the lives of 72 million people.
Waste Connection – WCN 📈
Ziggma Score: 81
2024 Price/Earnings: 35x
2024 Projected profit growth : 62%
Waste Connections provides non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada. It offers collection services to residential, commercial, municipal, industrial, and exploration and production (E&P) customers; landfill disposal services; and recycling services for various recyclable materials, including compost, cardboard, mixed paper, plastic containers, glass bottles, and ferrous and aluminum metals
Why WCN is attractive
We like Waste Connection’s strong market position in exclusive and secondary markets. This protects the company from competition and procure pricing power. As ciruclarity gains in importance, WCN’s expertise in recycling stands to drive the company’s sales and profits for years to come. WCN’s has a beta of just 0.58, meaning its stock is much less volatile than the market.
Disclosure
Ziggma team members presently hold shares in some of the stocks mentioned in this article.
Important Notice
This article is not investment advice. We cannot predict whether these stocks will go up or down. Our analysis is centered entirely on publicly available information. Please do your own homework prior to making an investment decision.
