It’s a common assumption that the best ESG (environmental, social, governance) stocks to buy may be profitable for your inner wellbeing but not necessarily for your portfolio. After all, doing the right thing in our personal lives usually comes at a cost; either a direct one or a cost associated with a lack of recognition of upright behavior or action.
However, investing in ESG stocks does not need to be a binary affair, where winning in the moral field leads to losses in the portfolio. According to the Harvard Business Review, going the sustainable or responsible route can pay off. It stands to reason, then, that investors may also benefit. Thus, this framework provides additional impetus for must-buy ESG stocks.
To be fair, it’s possible to overdo it. According to a Wall Street Journal article earlier this year, companies which remain neutral on social or political issues outperform enterprises that lean left. At the same time, American society is becoming more liberal over the past half-century. Over time, people expect more from business entities, which is why leading ESG stocks could thrive.
Plus, doing good nets positive PR. On that note, below are top ESG stocks for August.
At first glance, Valvoline (NYSE:VVV), which specializes in automotive retail services like oil changes, might seem an odd idea for best ESG stocks to buy. After all, hydrocarbon extraction processes aren’t exactly known for their environmentally friendly profile.
Nevertheless, the company is apparently quite serious about its sustainability and product stewardship initiatives. As well, Valvoline committed itself to the principles of diversity, equity and inclusion, or DEI. It’s not just cheap marketing rhetoric either. Last year, Valvoline ranked number 41 in Investor Business Daily’s 100 Best ESG Companies list.
Fundamentally, VVV represents one of the top ESG stocks for August because of its rising relevance. With the average age of vehicles on U.S. roadways hitting a record 12.5 years, people are holding onto their rides for longer than ever. That’s going to benefit auto maintenance centers.
Finally, analysts peg VVV a consensus moderate buy. On average, their price target lands at $41.33, implying nearly 18% upside potential. Thus, it makes a strong case for leading ESG stocks.
A multinational pharmaceutical company, Merck (NYSE:MRK) organically slides in as one of the best ESG stocks to buy. Basically, the fundamental nature of the business is to help people. In particular, Merck is a powerhouse in the field of oncology. Over the training one-year period, MRK gained 19% of equity value.
Like other high-profile enterprises, Merck takes its views on sustainability and responsibility to people and communities seriously. In particular, the big pharma firm collaborates with key stakeholders to ensure that its scientific innovations are accessible and affordable to those in need. As well, it conducts research in infectious diseases and vaccine development, thus empowering underprivileged communities.
Last year, Merck ranked as number nine in Investor Business Daily’s 100 Best ESG Companies list. What’s especially appealing about those interested in investing in ESG stocks is that Merck also benefits from a viable northbound pathway. Right now, analysts peg MRK as a consensus strong buy. Their average price target hits $126, implying nearly 19% upside potential.
An American agribusiness and food company, Bunge (NYSE:BG) also offers an organic case for best ESG stocks to buy. As a critical component of the food supply chain – with the company involved in food processing, grain trading and fertilizer – Bunge has an incentive to lead from the front regarding sustainability and responsibility.
Unsurprisingly, Bunge features a cohesive directive regarding its sustainability initiatives. Per its website, the company commits to three core pillars: action on climate, responsible supply chains and accountability. Earlier this year, the company generated headlines for its program to drive regenerative agriculture in Brazil. One of the highlights of the program is that it will be offered at no cost to farmers.
Last year, Bunge ranked as number 18 in Investor Business Daily’s 100 Best ESG Companies list. It was also the top-ranked agriculture-related enterprise by a country mile. Looking to the Street, analysts peg BG as a consensus strong buy. Their average price target stands at $135, implying nearly 20% upside potential.
On the date of publication, Josh Enomoto did not have (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.