Among publicly traded securities, so-called socially responsible stocks may be one of the most controversial categories. Basically, an underlying assumption exists that if you support sustainable policies, you sacrifice profitability. Still, that framework might need a readjustment.
Basically, ethical business practices can actually yield better financial results. Nowadays, consumers – especially the Generation Z demographic – are more attuned to enterprises that think about elements beyond just the bottom line. Therefore, socially responsible stocks can win out in the long run.
In addition, academic evidence suggests that that companies’ ethical practices can help boost profits. Again, it’s not surprising when you consider the shifting mores in society. On that note, below are socially responsible stocks with long-term skyrocketing potential.
Microsoft (MSFT)
While Microsoft (NASDAQ:MSFT) ranks among one of the biggest technology companies in the world, it’s also known for its various environmental, social and governance (ESG) directives. In fact, it ranked as number one on Investor’s Business Daily’s 100 Best ESG Companies for 2023 list. Judging from its nearly 16% upside performance since the beginning of January, it’s ethical and viable.
Financially, Microsoft represents one of the top socially responsible stocks because while it promotes various initiatives covering the environment and social equity, it also rewards shareholders. Specifically, the company beat expectations for earnings per share throughout fiscal 2023. The average positive earnings surprise came out to 8.4%.
For fiscal 2024, analysts anticipate that EPS will land at $11.65 on revenue of $244.21 billion. That’s a sizable improvement over last year’s print of $9.81 per share on sales of $211.91 billion.
Lastly, covering experts rate MSFT a strong buy with a $470.30 average price target. That implies about 10% upside potential.
Alphabet (GOOGL)
Another world-renowned tech giant, Alphabet (NASDAQ:GOOGL) came in at number 25 on IDB’s list for top ESG companies last year. Fundamentally, the company should benefit from its ownership of the Google ecosystem. Commanding an overwhelming market share of the search engine space, GOOGL probably isn’t going anywhere but up.
It’s another example of enterprises that are focused on equity and sustainability and yet are quite profitable. Last fiscal year, the company beat EPS expectations four times out of four. Overall, the average positive earnings surprise came out to 6.7%. It’s off to a somewhat slow start this year. However, in the past 52 weeks, it’s up nearly 43%.
For fiscal 2024, analysts believe the company can hit EPS of $6.81 on revenue of $342.33 billion. Last year, Alphabet posted EPS of $5.80. Further, it rang up sales of $307.39 billion. So, it’s on pace for 11.4% growth in the top line.
GOOGL carries a strong buy consensus view with a $165.37 price target, implying about 10% upside.
TJX Companies (TJX)
An interesting name among socially responsible stocks, TJX Companies (NYSE:TJX) is a discount retailer. Specifically, it specializes in off-price apparel, shoes and accessories. It made number 22 on IDB’s list of top ESG businesses in 2023. On a fundamental note, the gradual return to normalization could see increased demand for cheap business casual attire.
So far, this narrative seems to be playing out. Since the January opener, TJX stock gained almost 7%. Over the trailing 52 weeks, shares gained over 33%. These are not bad statistics at all for a discretionary retailer. Last fiscal year, the company beat EPS expectations in all four quarters. The average positive earnings surprise came out to an impressive 7.6%.
For the current fiscal year, experts believe that EPS will eventually land at $4.08 on revenue of $56.23 billion. That’s an improvement over last year’s print of $3.86 per share on sales of $54.22 billion.
Analysts rate TJX a strong buy with a $110.84 average price target, implying over 11% growth potential. It’s one of the socially responsible stocks to consider.
Air Products and Chemicals (APD)
An interesting idea for socially responsible stocks, Air Products and Chemicals (NYSE:APD) provides atmospheric gases, process and specialty gases, equipment, and related services throughout the world. On IDB’s ESG list last year, Air Products came in at number 18. To be fair, it’s one of the riskier ideas on this list, with shares losing 13% year-to-date.
Part of the volatility also centers on some recent disappointing financial performances. From the first through third quarter in fiscal 2023, the company posted an average positive earnings surprise of 2.4%. However, in Q4, management disclosed EPS of $2.82. The problem was that analysts anticipated a profit of $3 per share.
Nevertheless, it’s too early to call it quits on APD. For fiscal 2024, the company should print an EPS of $12.33 on sales of $12.68 billion. Last year, Air Products posted $11.51 per share on sales of $12.6 billion.
APD also carries a moderate buy view with a $272 price target, implying 15% upside potential. If you want a potentially discounted opportunity among socially responsible stocks, this might be it.
Mondelez (MDLZ)
A multinational confectionary, food, beverage and snack company, Mondelez (NASDAQ:MDLZ) offers everyday relevance for investors and consumers. And if the economy gets a bit wobbly, Mondelez should rise as a beneficiary of the trade-down effect. Notably, MDLZ ranked as number 15 on IDB’s top ESG list.
To be fair, Mondelez isn’t off to the greatest start this year, with shares down 2% since the January opener. However, in the past 52 weeks, MDLZ is up about 8%. Financially, the confectionary giant has been rock solid. It beat EPS expectations four times in fiscal 2023. The average positive earnings surprise came out to 8.2%.
For the current fiscal year, analysts believe that Mondelez will post EPS of $3.52 on sales of $37.14 billion. That’s a decent improvement over last year’s print of $3.19 per share on sales of $36.02 billion. Further, given economic conditions, it wouldn’t be surprising to see Mondelez reach sales of $37.61 billion, the high-side estimate.
Experts rate MDLZ a strong buy with an $83.47 price target. It’s one of the top socially responsible stocks.
Bunge (BG)
A critically important name among socially responsible stocks, Bunge (NYSE:BG) operates as an agribusiness and food company worldwide. It conducts operations through four segments: Agribusiness, Refined and Specialty Oils, Milling and Sugar and Bioenergy. On IDB’s ESG list, Bunge came in at number 11.
For full disclosure, it’s been a tough time for the agribusiness overall. Obviously, with the uncertain geopolitical climate combined with supply chain disruptions, BG stock has been all over the map. While it might be off to a slow start in 2024, it’s up 6% in the past 52 weeks. Financially, Bunge performed quite sell last year, delivering a positive earnings surprise of 22.65% in the past four quarters.
Circumstances may get shaky in 2024. EPS may reach $9.44 on sales of $56.33 billion. Last year, EPS landed at $13.66 on revenue of $59.54 billion. That said, the high-side revenue target calls for $65.47 billion.
Analysts are optimistic with BG’s chart performance, rating it a moderate buy with a $115.30 target. That implies more than 16% growth potential.
Adobe (ADBE)
Another top-tier technology enterprise, Adobe (NASDAQ:ADBE) is a software giant. It’s perhaps best known for its Photoshop program and other products aimed at the creatives community. Because of the rise of the gig economy, Adobe could be more important than many people realize. As for its inclusion as one of the socially responsible stocks, ADBE ranked as number 14 in IBD’s top ESG list.
Admittedly, Adobe is off to a rough start in 2024, losing almost 14% of equity value. However, it’s up over 35% in the past 52 weeks. Over the long run, the red ink could turn out to be a discounted opportunity. Last fiscal year, the company beat EPS expectations all four times. The average positive earnings surprise came out to 2.85%.
Even better, 2024 could be a big year for the software firm. Experts anticipate EPS to land at $18.04 on sales of $21.46 billion. In 2023, the company posted $14.81 per share on revenue of $17.89 billion.
Finally, analysts rate ADBE a moderate buy with a $620.63 target, implying over 24% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
