While seemingly everyone loves talking up environmental, social and governance (ESG) initiatives, ESG stocks to buy present a challenge. It’s difficult to get over the reputation that doing good for others will invariably lead to a lack of profitability.
However, with younger generations increasingly focused on sustainability and other social concerns, not doing right may start imposing consequences. With the internet and social media, people are making more informed decisions about their purchases. Therefore, doing right may eventually be a prerequisite to success.
Given the shifting mores, below are three ESG stocks to buy (or at least strongly consider).
Applied Materials (AMAT)
Based in Santa Clara, California, Applied Materials (NASDAQ:AMAT) falls under the semiconductor equipment and materials category. Per its public profile, the company engages in the provision of manufacturing equipment, services and software to the semiconductor, display and related industries. Analysts rate shares a consensus moderate buy with a $234.91 price target, implying about 11% upside potential.
What makes Applied one of the ESG stocks to buy is the underlying efforts toward sustainability. In particular, the company is focused on environmental impacts, both within its organization as well as its partners (suppliers and customers).
Applied is a consistent performer, making it attractive. In the past four quarters, its average positive earnings surprise came out to 8.15%. For fiscal 2024, covering experts anticipate a rather slow year. However, for fiscal 2025, EPS could rise to $9.53 on sales of $29.65 billion. Last year, the company posted earnings of $8.05 per share on revenue of $26.52 billion.
Target (TGT)
One of the top big-box retailers, Target (NYSE:TGT) falls under the consumer defensive ecosystem. As a general merchandise retailer, it has evolved into a one-stop shop. Many if not most of its stores offer apparel, jewelry and accessories, shoes, beauty and personal care products, electronics, groceries and several other home goods categories.
A mainline initiative of the company centers on inclusion and diversity efforts. As Target Executive Vice President Kiera Fernandez remarked, Target is “committed to creating equity” and it ensures that its “intentions have a meaningful impact” on its employees, shoppers and broader communities. Some of the company’s efforts have aroused criticism yet it maintains its commitment.
To be fair, the current fiscal year may be a challenging one. While EPS may rise to $9.43 (from last year’s $8.94), revenue might only reach $107.13 billion. That’s down slightly from the prior year. Still, looking out to the next 12-month cycle, EPS could improve to $10.52 on revenue of $111.1 billion. Thus, TGT is one of the ESG stocks to buy.
Prologis (PLD)
Headquartered in San Francisco, California, Prologis (NYSE:PLD) is structured as a real estate investment trust. According to its corporate profile, Prologis the global leader in logistics real estate with a focus on high-barrier, high-growth markets. Analysts rate PLD stock a consensus strong buy with a $130.80 price target, implying over 17% upside potential.
According to the company’s website, its board of directors serves shareholders’ “best interests, sets company strategy, and, provides independent and experienced oversight.” Further, the board features four standing committees. These cover the areas of auditing, board governance and nomination, talent and compensation, and executive matters. Further, Prologis stresses that it holds its employees and board members to the highest ethical standards while partnering with entities that hold shared values.
Financially, the company has enjoyed an impressive track record over the past four quarters. During this cycle, the average positive earnings surprise clocked in at 26.88%. For fiscal 2024, analysts anticipate revenue to reach $7.65 billion. That’s up 12.2% from last year’s print of $6.82 billion. It’s an intriguing idea for ESG stocks to buy.
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.
