As a nation, we are becoming more aware of our environment and our responsibility to pass along a healthy planet to our children. As a result, many of us have taken to recycling or educating others about the importance of conserving energy. Many investors are looking to make a difference as well, and some will only invest in so-called socially responsible companies.
What Is A Socially Responsible Company Or Investment?
Generally speaking, socially responsible investors will avoid so-called "sin stocks" or companies engaged in the weapons, alcohol or tobacco business. Often they will also only invest in companies with a proven track record of supporting the environment. (For more, see our answer to the frequently asked question, What is socially responsible investing?)
With that in mind, the Dow Jones Sustainability United States Index provides investors with a short list of public companies generally regarded as socially responsible. This could be a great start for anyone interested in making socially responsible investments. The index is reviewed quarterly, and adjusted when necessary, to stay current with the changing business environment.
Five Green Companies Avoiding The Red
Following are five stocks listed on the Dow Jones sustainability index (as of February 28, 2009) that are expected to generate a profit in their current year:
|Coca Cola (NYSE:KO)||$102.1 Billion|
|Gap (NYSE:GPS)||$9.1 Billion|
|General Electric (NYSE:GE)||$105.1 Billion|
|General Mills (NYSE:GIS)||$16.5 Billion|
|Intel (Nasdaq:INTC)||$81.7 Billion|
General Electric is a huge company that naturally generates a great deal of waste and uses a lot of energy. However, the company appears to be focused on improving its "citizenship". A link on GE's website, www.ge.com/citizenship/performance_areas/environment_health_safety_water.jsp, lists the amount of waste it generates annually and its water usage. One can also measure its improvement or non-improvement in a variety of other metrics.
To its credit, GE indicates that it's working to cut its water footprint by a hefty 20% by 2012. It actively puts its money where its mouth is. Also per its website: "In Kochi, India, GE Water & Process Technologies teamed with GE Energy's solar business to bring clean water to the Home of Hope, an orphanage with some 80 girls under its care."
The company also works to bring energy-efficient products to market. Its Signa 1.5 T Hde MRI machine comes to mind. According to the website, it uses 41% less energy than previous systems.
GE Expected To Generate Green
Investors will also likely be interested to know that GE is expected to generate a great deal of green. At present, Wall Street expects the company to have earnings per share of $1 this year and 95 cents in 2010. Although that is definitely not the direction I think shareholders want to see earnings heading, it isn't bad since the stock can currently be purchased for just under $10. (Can your principles make you richer or poorer? Find out if it pays to pick your portfolio based on ethics; see Socially Responsible Investing Vs. Sin Stocks.)
Finally, some insiders appear to think that the stock is a good value. Form 4's show a number of purchases in March, including employee stock options.
The Minnesota-based food maker is a giant. It is expected to generate north of $14 billion in revenue in its current year and $3.90 a share on the bottom line. It is also expected to grow more than 7% per annum in the next five years, according to Thomson Financial Networks. That is impressive, particularly since the economy is in such a tailspin. A Form 4 filed March 26 shows Michael D. Rose, director/board chairman, acquired 10,000 shares at an average of $48.45, almost doubling his position.
But even beyond its financials, General Mills is doing things to make the world a better place. On its website the company offers the following: "Since fiscal 2000, our North American operations have reduced total energy usage by 6 percent - nearly 1 million kWh (kilowatt-hours). Our international facilities reduced their energy usage by 3 percent over the same period." Its website also points out that the company is "among the largest users of recycled paper packaging in the United States". Obviously the company will focus on the positives, but using recycled paper can help reduce waste in landfills.
Whether you are a socially responsible investor is up to you. But it's important to realize that some companies are expected to generate profits while doing good things to help the environment and make the world a better place.
Find out how morals and ethics can bring you a surprising return; see Go Green With Socially Responsible Investing.
Mutual Funds & ETFsLearn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
Investing NewsWill Ferrari's shares move fast off the line only to sputter later?
Investing BasicsPlain vanilla is a term used in investing to describe the most basic types of financial instruments.
Stock AnalysisHere are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
InvestingThe further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
Options & FuturesProfessionals choose the options available to you in your plan, making your decisions easier.
Fundamental AnalysisOptions market trading data can provide important insights about the direction of stocks and the overall market. Here’s how to track it.
Stock AnalysisCan these two oil stocks buck the trend?
Investing NewsAlcoa plans to split into two companies. Is this a bullish catalyst for investors?
Stock AnalysisIf you want to buck the bear market trend by going long on consumer stocks, these three might be your best bets.
Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>