By Brian Nelson, CFA
The investment landscape is fast changing, and investors want to invest how they want to invest. Custom approaches to meeting client needs have never been in greater demand. After all, the saying “there’s an ETF for that” has become as common as the saying “don’t put all your eggs in one basket.” There may be no greater or better investment than becoming more exposed to the sustainable trend of Environmental, Social and Governance [‘ESG’] investing, where ESG research points to key risks of a company that could have tremendous implications on its intrinsic value or fair value estimate distribution.
For example, how should investors think about Johnson & Johnson’s (JNJ) talc exposure liabilities? What about 3M’s (MMM) polyfluoroalkyl substances [PFAS] liabilities? How should investors think about the sustainability of the dividends of companies exposed to tobacco or fossil fuel production, areas that may be in secular decline? That’s not all there is to ESG research either. ESG research dives into an assessment of whether a company is a good one, a socially responsible one. Investors would have wanted to know if a company like Wells Fargo (WFC) was setting up fake bank accounts, wouldn’t you? Or if a firm like PG&E (PCG) had risks that could have contributed to the climate change-driven wildfires that scorched California? How about a company that keeps disappointing investors but allows the executive team to fly around in private jets?
You want to know the scoop on these types of companies, and that’s exactly what Valuentum’s ESG newsletter seeks to provide. We’ve developed a proprietary and analyst-driven ESG scoring system that ranks companies on a scale from 0-100 (100 = best) assessing their Environmental, Social, and Governance qualities. Only available in the Valuentum ESG newsletter, with every edition, we write up ESG-related commentary, publish ESG scores on companies of interest, and disclose their ESG worksheets for your review. We also include an ESG-focused simulated newsletter portfolio.
Two of the companies included in the simulated ESG Newsletter portfolio are Albemarle (ALB) and ASML Holding (ASML). Recently, concerns over the supply/demand dynamics for lithium have hurt Albemarle’s stock, but we’re being patient with this ESG-focused idea. The company also recently withdrew its offer for Australian lithium miner Liontown Resources after reviewing the target’s books the past several weeks. Albemarle’s financials remain quite volatile, too, but the firm’s recent quarterly results weren’t bad, “Albemarle Is One of the Best Growth Stories on the Market Today.” We’re being patient with Albemarle, but we reiterate that the company is an ESG-focused idea, not one targeted particularly for capital-appreciation or dividend growth potential.
On October 18, ASML Holding reported decent third-quarter results. Net sales came in at €6.67 billion, down sequentially. The company’s quarterly net bookings also faced pressure on a sequential basis, coming in at €2.6 billion, down from €4.5 billion during the second period of this year. Performance, however, was largely in-line with expectations, though the firm did put up a stronger gross margin than previously guided. Looking ahead, ASML Holding reiterated its expectation to grow net sales “towards 30% in 2023,” with flat results for 2024, before its growth story resumes in 2025. We think ASML is one of the most competitively advantaged players in the semiconductor space, and we won’t be removing it from the ESG Newsletter portfolio anytime soon.
NOW READ: Albemarle Is One of the Best Growth Stories on the Market Today
NOW READ: Top Dividend-Related News: MSFT, AAPL, ASML
———-
Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, QQQ, and SCHG. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a member? Subscribe today. The first 14 days are free.