Investors now consider sustainability a significant factor when investing. As the world moves inexorably towards more sustainable lifestyles and business practices, companies are focusing more on following environmental, social, and governance (ESG) norms. Investors’ interest in sustainability-focused investing is evident in the Vanguard ESG U.S. Stock ETF’s (ESGV) 11.9% gains over the past year.
Growing climate change concerns and the need for socially responsible business behavior have heightened the prominence of ESG investing. According to a Bloomberg analysis, global ESG assets will likely exceed $53 trillion by 2025.
Given this backdrop, we think it could be wise to bet on shares of fundamentally sound companies Microsoft Corporation (MSFT), Alphabet Inc. (GOOGL), and Intel Corporation (INTC), which score high on the ESG parameters.
Microsoft Corporation (MSFT)
Famous technology company MSFT in Redmond, Wash., develops and supports a range of software products, services, devices, and solutions. The company operates in the Productivity and Business Processes; Intelligent Cloud; and Personal Computing segments. According to JUST Capital’s comprehensive ranking of companies on ESG criteria, MSFT is ranked third among 100 companies.
On Nov. 17, 2021, MSFT agreed to collaborate with Bayer AG (BAYRY) to develop digital tools and data science capabilities for agricultural businesses and associated industries. The collaboration is expected to provide internet-based products to help farmers and initiatives related to agriculture become more efficient and sustainable.
For its fiscal first quarter, ended Sept. 30, 2021, MSFT’s revenues increased 22% year-over-year to $45.31 billion. The company’s non-GAAP operating income increased 27% year-over-year to $20.23 billion, while its non-GAAP net income increased 24% year-over-year to $17.21 billion. Also, its non-GAAP EPS came in at $2.27, up 25% year-over-year.
Analysts expect MSFT’s EPS and revenue for its fiscal 2022 to increase 14.5% and 17.2%, respectively, year-over-year to $9.22 and $197 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 34.4% in price to close yesterday’s trading session at $301.60.
MSFT’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has a B grade for Stability, Sentiment, and Quality. It is ranked #16 of 165 stocks in the Software – Application industry. Click here to check MSFT ratings for Growth, Value, and Momentum.
Alphabet Inc. (GOOGL)
Mountain View, Calif.-based GOOGL is the holding company behind Google and Other Bets. Its Google segments include Google Services and Google Cloud. Its products and platforms include Android, Chrome, Gmail, Google Drive, Google Maps, Search, and Youtube. GOOGL is ranked first among 100 companies, according to JUST Capital’s comprehensive ranking based on ESG factors.
On Jan.14, 2022, GOOGL’s Waymo announced that it had signed a multi-year deal with J.B. Hunt Transport Services, Inc. (JBHT) to haul freight in Texas using autonomous trucks. As driver shortages become acute, autonomous trucks are expected to be used increasingly over the next few years.
GOOGL’s revenue for its fiscal third quarter, ended Sept. 30, 2021, increased 41% year-over-year to $65.11 billion. The company’s operating income increased 87.5% year-over-year to $21.03 billion, while its net income increased 68.3% to $18.93 billion. Also, its EPS increased 70.6% year-over-year to $27.99.
For its fiscal year 2021, GOOGL’s EPS and revenue are expected to increase 85% and 39.2%, respectively, year-over-year to $108.40 and $254.10 billion. It surpassed consensus EPS estimates in each of the trailing four quarters. The stock has gained 41.8% in price over the past year to close yesterday’s trading session at $2,666.15.
GOOGL’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
It has an A grade for Sentiment and a B grade for Quality. It is ranked #3 of 77 stocks in the Internet industry. To check the other ratings of GOOGL (Growth, Value, Momentum, and Stability), click here.
Intel Corporation (INTC)
INTC designs, manufactures, and sells essential technologies for the cloud, smart, and connected devices worldwide. The Santa Clara, Calif., company’s segments include its Data Center Group; Internet of Things Group; Mobileye; Non-Volatile Memory Solutions Group; and Programmable Solutions Group. INTC is ranked second among 100 companies, according to a JUST Capital ranking based on the ESG issues.
On Dec. 16, INTC CEO Pat Gelsinger announced the building of a new chip packaging and testing factory in Malaysia, which is set to become operational in 2024. This new facility will likely enable the company to capture the rising demand for semiconductor chips worldwide as the application of semiconductor chips grows.
INTC’s non-GAAP revenue for its fiscal third quarter, ended Sept. 30, 2021, increased 5% year-over-year to $18.10 billion. The company’s non-GAAP net income increased 54% year-over-year to $7 billion. Also, its non-GAAP EPS came in at $1.71, up 59% year-over-year.
Its EPS is expected to grow at a 3.1% rate per annum over the next five years. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained 4.9% to close yesterday’s trading session at $52.04.
INTC’s POWR Ratings reflect solid prospects. The stock has an overall A rating, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Sentiment and Quality. Within the A-rated Semiconductor & Wireless Chip industry, it is ranked #10 of 100 stocks. Click here to see the other ratings of INTC for Growth, Stability, and Momentum.
Click here to checkout our Semiconductor Industry Report for 2022
MSFT shares rose $0.43 (+0.14%) in premarket trading Friday. Year-to-date, MSFT has declined -10.32%, versus a -5.94% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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