Responsible Investing: 5 Undervalued Stocks With High CSR Ratings

Responsible Investing: 5 Undervalued Stocks With High CSR Ratings

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We found 5 stocks with high ratings for corporate social responsibility, and strong earnings growth for 2014.  

According to Dale Wannen, President of Sustainvest Asset Management, sustainable and responsible investing (SRI) is one of the fastest growing investment disciplines in the U.S, growing 22% between 2010 and 2012. Dale specializes in SRI, and his fund uses a variety of asset classes, from private equity to venture capital, to gain a competitive return while also supporting companies and products with high standards of corporate social responsibility. 

SRI considers environmental, social and corporate governance criteria (ESG) to generate long-term competitive financial returns along with positive societal impact. Overall today, one in nine dollars under professional management use strategies that take ESG into account.

So we decided to run a screen looking for stocks that have been able to pair strong earnings growth with high ratings in regards to their ESG. To do that we started off with the 50 companies on CSRHub's Corporate Social Responsibility Index. These were the highest scoring companies with regards to:

  • Corporate Citizenship: Looks at a company's impact on the community. Companies that donate a lot to charity, and work to protect the surrounding environments score highly in this category.
  • Corporate Governance: Takes into account how a company is run. This score is based on transparency, shareholder rights, and the makeup of a company's board. As Wannen says, advisory shareholder resolutions are "crucial" to ESG, because they are usually how these kinds of issues get brought to the attention of company management. 
  • Workplace: Looks at training, employee pay, and the happiness of workers. 

The scores used in the index are a composite of the scores in these three separate categories.

We then narrowed the screen further by looking at EPS growth for next year – and only included companies with projected growth above 9%. Finally we also looked at price to equity ratios, and narrowed the screen to companies with a P/E ratio below 15. 

There were five companies left on our list to consider for sustainable and responsible investing.  

Click on the interactive chart below to view analyst ratings over time. 

Do you see investing opportunities in these stocks for the next year? Use the list below as a starting point for your own analysis.

1. Dean Foods Company (DF, Earnings, Analysts, Financials): Operates as a food and beverage company in the United States. Market cap at $1.58B, most recent closing price at $16.77.

P/E: 4.11

EPS This Year: 107%

EPS Next Year: 9.32%

CSR Rating: 71.18


2. Kohl's Corp. (KSS, Earnings, Analysts, Financials): Operates department stores in the United States. Market cap at $11.64B, most recent closing price at $55.76.

P/E: 13.13

EPS This Year: -3.2%

EPS Next Year: 9.34%

CSR Rating: 72.19


3. Macy's, Inc. (M, Earnings, Analysts, Financials): Operates department stores and Internet Web sites in the United States. Market cap at $19.24B, most recent closing price at $52.14.

P/E: 13.64

EPS This Year: 11.0%

EPS Next Year: 11.98%

CSR Rating: 72


4. Microsoft Corporation (MSFT, Earnings, Analysts, Financials): Develops, licenses, and supports a range of software products and services for various computing devices worldwide. Market cap at $303.03B, most recent closing price at $36.58.

P/E: 14.64

EPS This Year: 29%

EPS Next Year: 9.02%

CSR Rating: 73.87


5. Oracle Corporation (ORCL, Earnings, Analysts, Financials): Develops, manufactures, markets, distributes, and services database and middleware software, applications software, and hardware systems worldwide. Market cap at $164.09B, most recent closing price at $34.60.

P/E: 14.91

EPS This Year: 15.3%

EPS Next Year: 9.02%

CSR Rating: 72.87


Adapted from the original Sustainvest blog post, available here. List compiled by James Dennin. Environmental ratings sourced from CSRHub. Analyst ratings sourced from Zacks Investment Research. All other data sourced from Finviz.

Dale Wannen, a Kapitall contributor, is the coolest eco-conscious advisor out there, and President of Sustainvest Asset Management, an investment advisory firm focused on integrating environmental, social and governance (ESG) principles into investment portfolios. He frequently writes and speaks on the topic of sustainable and responsible investing and believes that triple bottom line investing is something that all investors should be approaching. To learn more, Dale can be reached at [email protected].

Sustainvest Asset Management, LLC is a registered investment advisor based in Petaluma, CA which focuses on sustainable and responsible (SRI) investing.  As an independent practice, we are able to give clients an objective view without any conflict of interests. This independence allows us to make decisions in the best interest of our clients. Sustainvest Asset Management does not sell financial products and is free to explore the best solutions for our client’s needs.

Disclosure: The information contained in this letter has been prepared from sources we believe to be reliable, but we make no guarantee as to its accuracy. No information herein is intended as an offer or solicitation of an offer to sell or buy or as a sponsorship of any company or entity. Opinions expressed herein are subject to change without notice. The writings of authors do not necessarily represent the views of Sustainvest Asset Management LLC. There are certain risks involved with investing.

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