Diving into the world of Environmental, Social, and Governance, seeking undervalued ESG stocks can feel like hunting for unicorns. Some investors believe that many of the ESG stocks to buy can soothe their consciences but don’t outperform the market. However, the financial landscape is teeming with opportunities, including cheap ESG stocks.
Looking at the iShares ESG Aware MSCI USA ETF (NASDAQ:ESGU) dispels the idea that ESG stocks yield minimal returns. The ETF is up more than 57% in the past five years and offers an enticing 1.50% dividend yield of 1.50%. Additionally, it offers five consecutive years of dividend payments. There’s much to like about the ESG space and its investment prospects over the long haul. These are three undervalued ESG stocks to consider.
Meta Platforms (META)
Amidst the echelons of tech giants, Meta Platforms (NASDAQ:META) shines for its tech prowess and its steadfast commitment to ESG objectives. The firm has taken noteworthy steps in environmental sustainability, with its pledge for net zero emissions by 2030. Its social initiatives are equally striking. Beyond just connecting people, Meta aims to foster genuine diversity, unwaveringly counter misinformation, and support small businesses.
On the governance front, transparency isn’t merely a token gesture for Meta. Its consistently released annual ESG reports openly welcome third-party evaluations. This refreshing blend of environmental commitment, social responsiveness, and transparent governance underscores its role as a leader in marrying tech innovation with corporate responsibility.
2023, fondly dubbed as the ‘Year of Efficiency’ by Meta, has seen it reap bountiful rewards. Yet, interestingly, according to Tipranks, there’s still room for a 20% upside on its current stock performance. The future looks promising for Meta, a tech behemoth seamlessly blending innovation with responsibility.
Bunge (NYSE:BG) stands tall in the relatively crowded agribusiness, presenting a compelling blend of responsibility and innovation. With its roots firmly planted in food processing, grain trading, and fertilizer, Bunge is leading the sustainability trend. The corporation has been showcasing a concrete vision focused on three core pillars: action on climate, responsible supply chains, and accountability.
Additionally, it has a compelling program designed to stimulate regenerative agriculture in Brazil, offering it at zero cost to farmers.
The financial aspects of Bunge are equally engaging. Trading at just 0.3 times forward sales estimates, its stock is down 76% compared to the sector median. It’s hard to overlook the potential value of a stock that has a reasonable valuation and has taken a hit in recent months.
Bunge also has a respectable 2.3% dividend yield and two years of consistent growth. During that time frame, the company has exceeded a 20% return on equity. Bunge has created a distinctive niche that is more than just an agribusiness. Bunge’s innovative business model is a testament to its robust fiscal success and environmental stewardship.
Host Hotels & Resorts (HST)
In the vast landscape of real estate investment trusts, Host Hotels & Resorts (NASDAQ:HST) stands out for its property prowess and remarkable ESG endeavors. In aiming to build a greener tomorrow, it has penned a road map for a 30% energy reduction per square foot by 2025.
The corporation’s societal commitments extend beyond bricks and mortar. Host Hotels & Resorts is also focusing on enriching communities, fostering workplace diversity, and championing philanthropy. These steps haven’t gone unnoticed. Nods from Barron’s and the CDP Climate Change A-List highlight Host Hotels as a beacon of positive change in the industry.
It has operated an incredibly consistent business, with forward average-funds-from-operations growth at roughly 54%. Additionally, net income margin is at a spectacular 14.5%, ahead of the sector median by 19%. Moreover, with cash from operations at over $1.5 billion, it’s been rewarding its shareholders and then some, with a dividend yield that is close to 4%.
On the date of publication, Muslim Farooque 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.