Looking to invest in stocks with a reputation for positive social and environmental action? There are more options than simply solar panel and electric car companies.
“Global corporations are increasingly acknowledging climate change as reality and are adopting measures to reduce their emissions and environmental impact,” writes Mile Bellamente, Project Director at Climate Counts.
His firm goes out and scores companies on their approach to climate leadership and how well companies are preparing for a low-carbon future by committing to emissions reductions. “We realize that this is a bar that will continually need to be raised in order to meet the challenges ahead.”
Business Section: Investing Ideas
Climate Counts scores companies on a scale from 1-100.
50 – 100 points means a company is “striding” toward a low-carbon future
13 – 49 points means a company is “starting” to address their climate impact
12 points or less means a company is “stuck” without a climate strategy
For the list below we took stocks with a score of 60 and above and screened them for encouraging DuPont breakdowns. This is an equation that breaks down a company’s return on equity (ROE) into three parts: ROE = Net Profit Margin x Asset Efficiency x Financial Leverage
The higher the ROE the more profitable the company appears, but this profitability can come from many sources – some better than others. So we made sure all growth is positive:
-Improving Net Profit Margin, i.e. higher Net Income/ Revenues
-Improving Asset Efficiency, i.e. higher Sales/Assets
-Decreasing Financial Leverage ratio, i.e. lower Assets/Equity
In other words, it is preferable for ROE to rise because of higher net profit margins or asset efficiency. Increasing financial leverage (debt) would also increase ROE, but is not always a positive development for a company.
We were left with four names. Do you think these profitable and environmentally conscious names have a bright future ahead? For more detail on their Climate Counts scores, visit http://climatecounts.org/.
List Average 1-Year Return: 40%
1. Marriott International, Inc. (MAR, Earnings, Analysts, Financials): Operates and franchises hotels and related lodging facilities worldwide. Market cap at $12.01B, most recent closing price at $37.20. Climate Counts gives Marriott a 2011 total score of 73, a change of +11 from 2010. MRQ net profit margin at 5.15% vs. 4.54% y/y. MRQ sales/assets at 0.462 vs. 0.338 y/y. MRQ assets/equity at -5.344 vs. 7.739 y/y.
2. eBay Inc. (EBAY, Earnings, Analysts, Financials): Provides online marketplaces for the sale of goods and services, as well as other online commerce, platforms, and online payment solutions to individuals and businesses in the United States and internationally. Market cap at $59.09B, most recent closing price at $45.85. Climate Counts gives eBay a 2011 total score of 64, a change of +6 from 2010. MRQ net profit margin at 20.36% vs. 10.25% y/y. MRQ sales/assets at 0.12 vs. 0.111 y/y. MRQ assets/equity at 1.494 vs. 1.532 y/y.
3. Kimberly-Clark Corporation (KMB, Earnings, Analysts, Financials): Engages in the manufacture and marketing of health care products worldwide. Market cap at $33.24B, most recent closing price at $84.17. Climate Counts gives Kimberly-Clark a 2011 total score of 60, a change of +1 from 2010. MRQ net profit margin at 9.45% vs. 7.76% y/y. MRQ sales/assets at 0.269 vs. 0.257 y/y. MRQ assets/equity at 3.604 vs. 3.686 y/y.
4. Steelcase Inc. (SCS, Earnings, Analysts, Financials): Designs, manufactures, and distributes furniture systems and seating products, user-centered technologies, and interior architectural products primarily in North America, Europe, and Asia. Market cap at $1.21B, most recent closing price at $9.62. Climate Counts gives Steelcase a 2011 total score of 60, a change of +0 from 2010. MRQ net profit margin at 1.95% vs. 1.17% y/y. MRQ sales/assets at 0.406 vs. 0.323 y/y. MRQ assets/equity at 2.422 vs. 2.774 y/y.
Written by Rebecca Lipman. Scoring sourced from Climate Counts, DuPont information sourced from Google Finance. All other data sourced from Finviz.
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Dig Deeper: Access Company Snapshots, Charts, Filings
- Marriott International, Inc. (MAR, Chart, Download SEC Filings)
- eBay Inc. (EBAY, Chart, Download SEC Filings)
- Kimberly-Clark Corporation (KMB, Chart, Download SEC Filings)
- Steelcase Inc. (SCS, Chart, Download SEC Filings)
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