ESG stocks are booming in popularity all over Wall Street. Regular investors that consider the financial fundamentals, as well as the social and environmental impact of companies before buying a slice of it, are yearning to get their hands full of the best ESG stocks to buy. PwC predicts US’ stake in the best sustainable investment funds to double to $10.5 trillion by 2026.
The Federal Reserve increasing the interest rates six times alone in 2022 has proven to be difficult, and many analysts believed that this year could bring recession.
What Is ESG? Are Sustainable Investments ESG Stocks?
With the world spiraling into a diagonal dip, every activity is rapidly eroding and decimating the sustainability of life. GHG emissions are making the planet warmer and the supply of fresh water is dwindling.
ESG stocks stand for environmental social governance where the best ESG companies are accosted as sustainable responsible investments. The ESG stock list consists of companies that make their operations more environment-conscious, and try to help rebuild communities. ESG investors have dedicated more resources to gaining in-depth knowledge of ESG
“ESG has become the most powerful driver of growth in assets and wealth management. This surge in demand has superseded all prior expectations”.
For long-term investors, it is wise to own a diversified portfolio of stocks across different sectors, with ESG becoming a pivotal decalogue.
ESG is interlinked to the rise and fall of the finances of businesses and in turn, the returns they offer to investors. Recent tidings of the Paris Agreement, bearing emission costs, and carbon taxes directly affect the stock price of a company. Emerging markets of clean energy can sweep many companies to become obsolete and so, financial implications are likely to be ascertained.
Finding the best ESG companies to invest in is challenging and this article will guide you to a subjective overview of the ESG stock list.
Top 5 Best ESG Stocks To Buy: An ESG Stock List
Here’s a look at the best ESG companies to invest in contemporarily.
Verisk Analytics Inc
The first pick of our ESG stock list is Verisk Analytics (VRSK). Verisk has a very clear ESG policy that has previously helped it achieve the 3rd rank out of 100 companies. The company caters data and risk management solutions to the financial industry. Analysts believe that Verisk Analytics dominates a monopoly in the property and casualty insurance market.
Verisk’s stock price-to-book ratio closes at 14 in contrast to the industry average for 5 years of 11.3. With a modest revenue and a propelling net income growth in the last five years, Verisk Analytics flourished with the US top 100 property and casualty insurance customers.
Microsoft Corporation
The largest and most popular software company in the world, Microsoft Corporation (MFST) has a variety of segments in cloud computing, digital infrastructure, and personal computing. The company has committed to transforming into carbon-negative by 2030 and is one of the leading companies in ESG initiatives. No wonder it ranks under one of the best ESG stocks to buy.
While Microsoft CEO Satya Nadella has forewarned of tough years ahead if the economy dives into recession due to rising interest rates, the company has been withstanding competitive advantages such as a strong brand identity. It would be humbling to see hiked rates leading to stock price corrections because tech companies like Microsoft’s valuations can be pulled down due to higher discount rates.
Adobe
Adobe has been a dominant player in digital content creation, software, publishing, and cloud storage with its flagship Photoshop software. Marketing analytics tools for business and subscriptions to premium Adobe software make for a brimming multi-billion revenue stream.
Adobe has given share returns of over 30 percent over the past decade. Adobe’s ESG stock score trudged from AA to AAA in December 2021. Adobe had to make it to the list of the best ESG companies to invest in. Its ESG highlight points to its $87 million investment in communities to aid nearly 1.6 million underserved minorities. With a global gender pay parity, Adobe’s half income is owed to renewable sources with goals of 100 percent attainment by 2035.
Nvidia Corporation
Nvidia (NVDA) manufactures graphics processing units (GPUs) for the gaming sector. The company is positioned at strongholds in supercomputers (AI), autonomous cars, and gaming. This is one of the best ESG companies to invest in.
Nvidia’s ESG initiatives have undertaken several goals including strengthening DEI goals, pursuing social change with its services and continuing to pay wages to vendors and contractors when the world stood still during the pandemic. Nvidia’s workforce has tripled its number of Black employees and developed the fifth most efficient supercomputer in the world, the DGX SuperPOD.
JB Hunt Transport Services Inc
JB Hunt Transport Services (JBHT) primarily operates in the trucking and rail carrier segments of the United States. As one of the leading transport companies in the US, JB Hunt’s ESG matters more than other sectors because climate-related policies are more sensitive to the transportation industry. It could also affect the price volatility if the US economy lands in a recession.
JB Hunt’s stock has been growing massively since 2003 with incredible bullish revenues and cash flows. Doesn’t that make JB Hunt one of the best ESG stocks to buy? Maintaining a low dividend payout of less than 20 percent, JB Hunt has been increasing its dividend payments in recent years.
