What are we looking for?
Opportunities to invest in North American equities that have policies of social responsibility.
The screen
This week, we screen using socially responsible investing (SRI) indicators provided by our screener to find opportunities to invest.
There are four SRI indicators we can look at within the Eikon screener.
- Product Environmental Responsible Use indicates whether or not the company reports about product features and applications or services that will promote responsible, efficient, cost-effective and environmentally preferable use.
- Product Impact Minimization indicates whether or not the company reports “take back” procedures and recycling programs to reduce the potential risks of products entering the environment.
- Environmental Supply Chain Policy indicates whether the company has a policy to include its supply chain in their effort to lessen its overall environmental impact.
- Environmental Supply Chain Monitoring checks whether or not the company conducts surveys of the environmental performance of its suppliers.
Today, we screened for mid-cap North American companies (a market capitalization between $1-billion [U.S.] and $10-billion), that meet all of these socially responsible indicators.
We then narrowed our search to find companies with earnings quality that is likely to persist using StarMine's Earnings Quality Rank. Earnings Quality Rank produces a score out of 100 and measures earnings sustainability across four factors: accruals, cash flow, operational efficiency and the company's use of exclusions. ("Exclusions" is a measure of the degree to which reported earnings reflect operating earnings; companies will report "special items" and "other exclusions," and both can have a negative impact on future earnings growth.)
Stocks in our screen had to have an Earnings Quality Rank of 90 or above.
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What did we find?
Our screen provided nine companies that met our socially responsible investing criteria. Two companies of note:
- Oshkosh Corp. is a designer, manufacturer and marketer of a range of specialty vehicles and vehicle bodies. The company is up 39 per cent year-to-date and pays a 1.1-per-cent dividend yield. It had the highest Earnings Quality Rank at 98.
- Buckle Inc. is a retailer of casual apparel, footwear and accessories. The company has 467 retail stores throughout the United States. It has gained 6.3 per cent year-to-date, and pays the highest dividend of the list at 4.3 per cent.
Investors are encouraged to do their own research before investing in any stocks listed here.
Paul Hoyda, CFA, is a market specialist in the financial and risk division of Thomson Reuters and specializes in governance, risk and compliance.