Megaphone icon ETF Database is now VettaFi. Read More >
ETFdb Logo
ETFdb Logo
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • Entrepreneur ETF
    • Equity ETF
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Future ETFs
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Modern Alpha
    • Multi-Asset
    • Multi-Factor
    • Nasdaq Investment Intelligence
    • Portfolio Strategies
    • Retirement Income
    • Smart Beta
    • Thematic Investing
    • Volatility Resource
  • Database
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
    • ETFs Future-Forward 2021: An iShares Investing Symposium
    • Three Themes for 2021: An iShares & MSCI Investing Symposium
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Videos & Podcasts
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Portfolio Strategies Channel
  2. Certain ESG Stocks Are Offering Discounts
Portfolio Strategies Channel
Share

Certain ESG Stocks Are Offering Discounts

Tom LydonApr 25, 2022
2022-04-25

Owing to the fact that many stocks with favorable environmental, social, and governance (ESG) traits are also growth equities, many ESG names and the related funds are struggling this year.

Blame that on rising interest rates, among other factors. Investors are right to focus on year-to-date performance, but it’s not all doom and gloom, because those declines are opening the door to valuation opportunities. Translation: Some stocks with impressive sustainability credentials are less expensive today than they were at the start of 2022.

Investors who don’t want to stock-pick among this group may want to consider exchange traded funds, including the Invesco ESG S&P 500 Equal Weight ETF (RSPE).

“Strategies focused on sustainable investing have languished this year, following the decline in technology stocks while largely missing out on the energy rally. However, there is some good news: Companies with leading sustainability practices such as Adobe (ADBE), Salesforce (CRM), and Aptiv (APTV) are now trading well below their fair value estimates,” said Morningstar analyst Lauren Solberg.

As its name implies, RSPE is an equal-weight ETF. It’s the ESG relative of the famed Invesco S&P 500 Equal Weight ETF (RSP B+). With that in mind, none of RSPE’s 182 holdings exceed a weight of 0.79%, as of April 2022. However, Adobe, Aptive, and Dow component Salesforce are all members of the ETF’s roster. That trio is badly bruised and now attractively valued.

“Among the hardest-hit stocks this year have been Salesforce, Adobe, and Aptiv, which tumbled 26.4%, 25.0%, and 35.9%, respectively. All three are now undervalued according to Morningstar’s analyst-assessed fair value estimates added Solberg.

Several member of the communication services sector have strong sustainability credentials, and some are now inexpensive after 2022 declines. That group includes AT&T (NYSE:T), Comcast (NASDAQ:CMCSA), and Dow component Walt Disney (NYSE:DIS) — all of which are members of the RSPE portfolio.

“We don’t believe AT&T enjoyed material synergies between its telecom and media operations, and we were happy to see these assets split into entities that will have greater strategic flexibility and focus. We award AT&T a narrow moat based primarily on cost advantages within the wireless business. Elements of efficient scale also benefit both the wireless and fixed-line businesses,” said Morningstar analyst Michael Hodel.

Other members of the RSPE portfolio that are now attractively valued with favorable ESG traits include Air Products and Chemicals (NYSE:APD), Booking Holdings (NASDAQ:BKNG), and Microsoft (NASDAQ:MSFT).

“For Microsoft overall we assign a wide moat rating arising from switching costs, network effects, and cost advantages. We believe that Microsoft’s different segments and products benefit from different moat sources,” added Morningstar’s Dan Romanoff.

For more news, information, and strategy, visit our Portfolio Strategies Channel.

Loading Articles...
Help & Info
  • Contact Us
  • Mission Statement
  • Press
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © ETF Flows LLC
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

Equity ETF Channel

Retirement Portfolio Redux: Is the 60%-40% Portfolio Dead?

Debbie CarlsonOct 22, 2020
2020-10-22

With the 10-year U.S. Treasury yield hovering below 1% and Federal Reserve Chairman Jerome Powell...

Equity ETF Channel

Portfolio Diversification Isn't Dead, It Was Just Sleeping

Debbie CarlsonOct 15, 2020
2020-10-15

Investors could be forgiven to think there was no reason to invest outside of the U.S. for the...

}
X