With the start of a new year, investors are looking to make changes to their portfolios and add new securities. As always, it’s tedious to find companies that seem appealing. But as we enter 2024, the focus on ESG and corporate responsibility is ever-increasing. Why should we care about this? Well, the reason investors should take more consideration is companies with great ESG metrics tend to outperform the market. That is because companies focus on profits, and these metrics tend to have strong management and great leadership at the helm driving the company toward success. So, as investors, we need to take more consideration into the actions a company takes that affect the environment and how a company treats its workers. In this article, we aim to provide you with three of the best ESG stocks with great metrics and a promising earnings outlook.
Adobe (ADBE)
Adobe (NASDAQ:ADBE) is a leading software company that provides a range of digital solutions to individuals and organizations across the world. In the past year, its share price exploded due to the rise of generative AI and the popularity of its products like Firefly AI and Adobe Sensei. Despite growing nearly 70% in the past year, 31 Yahoo! Finance analysts maintain an optimistic price target between an average of $651.48 and a high of $732.52.
Adobe has long committed to ESG. Not only has it reached almost global gender pay parity, but it has also proven to be an ESG leader in its industry, rising from an MSCI ESG rating from AA to AAA in 2021. Looking further at its sustainability, product collaborations with Ben & Jerry’s and NatWest Group (NYSE:NWG) have proven Adobe’s initiatives to reduce waste, paper use and energy with creative workflows and digital design. With its recent Q4 earnings driving record revenue and a strong 17% year-over-year (YoY) EPS growth, ADBE remains a clear ESG leader positioned well into 2024.
Xylem (XYL)
Xylem (NYSE:XYL) is a global water technology provider specializing in tackling the world’s toughest water challenges. Within one year, Yahoo! Finance analysts estimate it will trade between $100 and $140, averaging around $122.38.
Xylem’s EPS diluted growth (YoY) of 37.44% immediately cements its position as a stable and quick grower in a competitive industry. Profitability-wise, its EBITDA margin (TTM) of 16.57% finds itself surging ahead of its industry’s median of 13.72% by around 21%.
The company’s MSCI ESG rating currently ranks it at the highest grade possible, a AAA, placing it as a leader in the industrial machinery industry. Additionally, Xylem has already managed to reduce the CO2 footprint of its water customers by over 1 million metric tons in just two years. For example, its Flygt Bibo Alpha pump reduces energy usage by 60% versus traditional dewatering pumps. With a 2022 Global Water Award, under its belt as well, Xylem is a great stock pick for any investor looking to round out their ESG-centered portfolio.
Intuit (INTU)
Intuit (NASDAQ:INTU) is a software and services industry company that, through its services like TurboTax, Credit Karma and Mailchimp, has benefited more than 100 million customers in their financial decisions. Yahoo! Finance analysts estimate it will trade within a one-year price range of $470 to $720, averaging around $615.32.
Looking at its growth and profitability, Intuit displays itself as a well-established company primed for growth. For example, Intuit’s YoY EPS diluted growth, which is 38.88%, towers both over the sector median of 4.76% by about 717% and its own five-year average of 10.57% by around 270%. Additionally, its EBITDA margin (TTM) of 27.12% stands a whopping 188% above its sector median of 9.42%.
Intuit, similarly, has a AAA rating on the MSCI ESG ranking, putting it in the top 11% of the companies in the sector. Besides its decarbonization objective and alignment with global warming temperature goals, Intuit focuses more on the social and governance aspects by emphasizing diversity and inclusion. Even further, MSCI rates it as an ESG leader in corporate governance and human capital development, essential parts of running an efficient company. Overall, Intuit is a great ESG stock pick for anybody!
On the date of publication, Ian Hartana and Vayun Chugh did not hold (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.
Chandler Capital is the work of Ian Hartana and Vayun Chugh. Ian Hartana and Vayun Chugh are both self-taught investors whose work has been featured in Seeking Alpha. Their research primarily revolves around GARP stocks with a long-term investment perspective encompassing diverse sectors such as technology, energy, and healthcare.
