• The First Cut
  • Socially Responsible Stocks

    by John Bajkowski

    Socially Responsible Stocks Splash image

    Socially responsible investing (SRI) integrates social and ethical considerations into the stock selection process. Screens are often used to avoid poor social candidates—companies whose products and business practices are seen as harmful to individuals, communities, or the environment. Socially responsible investors also use qualitative factors to identify stocks that match their concerns, looking for companies with good employee relations, a good product safety record, operations that respect human rights or even strong community involvement.

    For this First Cut, we examine stocks that are widely held by socially responsible mutual funds. The First Cut used Morningstar’s Web-based mutual fund screening tool to identify no-load, socially responsible funds. An equally weighted portfolio of these funds was entered into Morningstar’s portfolio manager. The Web site’s portfolio X-Ray tool was then used to determine the stocks most widely held by the socially responsible funds.

    The First Cut table presents the 30 most widely held stocks arranged by their industry. As a group, the holdings of the socially responsible funds have a large-cap growth orientation; all of the top 30 stocks are members of the S&P 500 index. The forward price-earnings ratio (share price divided by estimated earnings for the current year) provides a general sense of valuation. The dividend yield (indicated dividend divided by share price) is indicative of the maturity of these stocks. Historical sales and earnings growth helps measure top- and bottom-line success, while the expected growth rate provides insight into expectations for these stocks. The ratio of liabilities to assets indicates the firm’s financial structure. Performance relative to the S&P 500 is measured through the 52-week relative strength index.

    While your beliefs and interests may lead you toward considering socially responsible stocks, success ultimately depends on selecting sound investments.

    Company (Exchange: Ticker) P/E
    Ratio
    (Est
    EPS)
    (X)
     
     
    Div
    Yield
    (%)
    Annual Growth Rate Total
    Liab
    to
    Assets
    (%)
     
     
    Market
    Cap
    ($ Mil)
    52-Wk
    Rel Strgth
    Index
    S&P = 0%
    (%)
    Share
    Price
    (3/12)
    ($)
     
    Historical Est
    EPS
    3-5 Yr
    (%)
     
    Sales
    3 Yr
    (%)
    EPS
    3 Yr
    (%)
     
     
    Industry
    Praxair, Inc. (N: PX) 17.2 2.3 2.5 10.2 11.3 63 24,380 -17 79.59 Chemical Manufacturing
    3M Company (N: MMM) 15.9 2.6 0.3 -3.7 11.4 53 57,921 11 81.38 Conglomerates
    PepsiCo, Inc. (N: PEP) 15.6 2.8 7.2 4.1 10.0 58 102,201 -12 65.10 Beverages (Non-Alcoholic)
    Procter & Gamble (N: PG) 15.3 2.8 4.0 8.7 9.3 49 183,919 -10 63.32 Personal & Household Products
    JPMorgan Chase & Co. (N: JPM) 14.3 0.5 3.9 -16.3 8.0 92 171,435 21 43.15 Investment Services
    Bank of America (N: BAC) 20.8 0.2 -0.3 -27.3 6.0 90 169,039 88 16.85 Money Center Banks
    Bank of New York Mellon (N: BK) 12.7 1.2 -2.1 -34.9 11.0 86 35,908 -21 29.72 Regional Banks
    Wells Fargo & Company (N: WFC) 15.8 0.7 20.4 -10.9 12.0 91 153,505 39 29.63 Regional Banks
    Gilead Sciences (M: GILD) 13.2 0.0 32.3 60.9 14.2 34 42,838 -30 47.42 Biotechnology & Drugs
    Johnson & Johnson (N: JNJ) 13.1 3.1 5.1 5.7 6.9 47 176,619 -14 64.18 Major Drugs
    Pfizer Inc. (N: PFE) 7.8 4.2 1.1 -7.1 1.1 58 137,842 -20 17.08 Major Drugs
    Medtronic, Inc. (N: MDT) 13.7 1.9 8.9 -2.6 10.8 43 48,401 6 43.94 Medical Equipment & Supplies
    Stryker Corporation (N: SYK) 16.9 1.1 9.3 14.0 12.2 27 21,984 10 55.23 Medical Equipment & Supplies
    Verizon Communications (N: VZ) 12.7 6.4 6.9 -11.8 4.9 82 84,306 -31 29.73 Communications Services
    CVS Caremark Corp. (N: CVS) 12.4 1.0 31.1 17.0 13.1 42 48,154 -13 34.63 Retail (Drugs)
    SYSCO Corporation (N: SYY) 15.0 3.5 4.1 9.4 15.0 62 16,971 -9 28.64 Retail (Grocery)
    Lowe's Companies (N: LOW) 17.7 1.4 0.2 -15.0 11.7 42 36,402 4 24.95 Retail (Home Improvement)
    Waste Management (N: WM) 15.7 3.8 -4.1 -1.4 7.8 70 16,208 -11 33.42 Waste Management Services
    Cisco Systems (M: CSCO) 16.8 0.0 8.2 5.7 11.8 46 148,180 9 25.88 Communications Equipment
    QUALCOMM, Inc. (M: QCOM) 17.5 1.7 11.4 -12.9 19.9 26 65,459 -31 38.95 Communications Equipment
    Apple Inc. (M: AAPL) 19.5 0.0 30.5 58.7 18.6 34 205,480 54 226.60 Computer Hardware
    Hewlett-Packard Co. (N: HPQ) 11.8 0.6 7.7 12.9 13.4 63 122,789 17 52.36 Computer Hardware
    Google Inc. (M: GOOG) 21.2 0.0 30.7 27.1 22.1 11 184,282 17 579.54 Computer Services
    Int'l Business Machine (N: IBM) 11.6 1.7 1.6 18.2 9.9 79 166,195 -8 127.94 Computer Services
    Emerson Electric Co. (N: EMR) 19.9 2.8 2.0 0.6 11.9 59 36,185 14 48.09 Scientific & Technical Instruments
    Thermo Fisher Scientific (N: TMO) 14.7 0.0 38.7 34.8 10.0 29 20,539 -3 50.16 Scientific & Technical Instruments
    Applied Materials, Inc. (M: AMAT) 17.4 2.3 -18.2 -30.8 12.8 29 16,603 -20 12.36 Semiconductors
    Intel Corporation (M: INTC) 12.9 3.0 -0.2 -3.6 11.9 22 117,496 -4 21.27 Semiconductors
    Microsoft Corp. (M: MSFT) 14.6 1.8 9.7 10.5 11.4 46 256,711 12 29.27 Software & Programming
    Symantec Corp. (M: SYMC) 11.9 0.0 14.1 -282.6 9.9 60 14,085 -17 17.47 Software & Programming
                         
    John Bajkowski is president of AAII.


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