These are Credit Suisse ‘best’ sustainable stocks
Credit Suisse analysts selected the finest inventories to take into account ESG (environmental, social and governance) issues, giving a list of ‘Ideas with impacts’ the bank predicts will outperform the broader market.
The analysts, led by Eugene Klerk, tracked investment themes that they believe correlate with the United Nations’ Sustainable Development Goals and identified those they believe are likely to perform well before selecting stocks with “quality” and “momentum,” or those that have seen price changes or earnings revisions. Green infrastructure, diversity, and the circular economy are among the themes.
“Based on current quality and momentum scores, we find that Healthy living now ranks first,” the analysts wrote in a July 12 research note. According to the analysts, stocks in this theme outperformed the MSCI AC World index by 43.2 percent in 2020.
Illnesses, particularly mental health conditions, have been on the rise around the world, according to the analysts, and the coronavirus pandemic appears to have exacerbated these. According to non-profit Kaiser Family Foundation data cited by Credit Suisse, 41.1 percent of U.S. adults reported symptoms of anxiety and/or depression in January 2021, up from 11 percent between January and June 2019.
Changes in lifestyle
“The pandemic has provided additional strong support for the relevance of a healthy lifestyle,” the analysts wrote, adding that this applies to both emerging and developed markets. And, according to the bank’s Emerging Consumer Survey 2021, which polled people in countries such as Brazil, China, and India, more than half say they have eaten more healthily since the pandemic began.
The analysts included three healthy living stocks on their “Ideas with Impact” list, all of which they rated outperform: Abbott Laboratories, Shenzhou, a Chinese clothing manufacturer, and Merida Industry, a bicycle manufacturer.
On a separate stock list, “Stocks with Quality and Momentum above 50,” the analysts included apparel firms Nike, Lululemon, and Vans owner VF Corporation, as well as Chinese sportswear company Li Ning, while in travel and leisure, its picks were ski operator Vail Resorts, swimming pool company Fluidra, and timeshare firm Travel + Leisure Co.
“Our conversations with investors show that interest in the topic of sustainable thematic investing is growing. Investors appear to gravitate toward companies that not only sell products and services that help achieve broader goals, such as those included in the 17 Sustainable Development Goals, but also have good ESG policies and performance,” according to Credit Suisse.
The market situation
Some minor dyspepsia after a binge for two days. Lethargic indices supported by a few big growth companies pulling down most problems as the returns from the Treasury fail to rise early. All in all, a minor V spill bounces off yet another mild S&P 500′s average 50-day test.
By a few measures, the recovery from the two-day, 3.5 percent shakeout from Monday to Friday was unusually strong and broad. Two days in a row of at least a 5:1 advancing:declining stock skew, with an overwhelming upside volume skew. The long-term implications of this type of buying surge are generally positive, shielding the index from significant losses in the coming weeks.
The index sway also served the purpose of instilling some doubt and uncertainty in the minds of traders and investors. The AAII retail-investor survey (which is frequently influenced by Monday market conditions because the group sends a reminder to vote on that day) revealed a significant drop in bulls to the lowest reading since September. The NAAIM tactical trading-advisor equity exposure index has turned negative and is now neutral.
I’ve said it before, but the occasional air pockets that result in single-digit losses and the whippy, indecisive market leadership (first all value, then all growth, then a shifting mix of the two) have kept overconfidence at bay, which is a net positive for the sustainability of an advance.
Of course, the poor market breadth that preceded this week, as well as the challenging seasonal atmospherics, cannot be avoided. The June shakeout/rebound produced a muted grind to new highs that didn’t last long.
Today’s new 52-week high list is jam-packed with names that should be classified as “traditional growth.” Not simply FAANG consensus long-term winners or disruptive growth. Long-term growers with established franchises and/or leading brands include Chipotle, Domino’s, Danaher, Charles River Labs, Cintas, and Copart.
Preference for “quality” over leverage has worked subtly recently, and it would not be surprising to see another scene-stealing attempt and a reflation-trade revival based on the idea that the delta growth scare is increasing vaccination rates but not changing consumer behavior much.
The ECB’s very dovish meeting outcome has pushed German yields back to five-month lows and appears to be exerting some pull on US 10-year yields, which are now back below 1.25 percent, making today a day for AAPL, AMZN, and MSFT to hold the S&P in place. Missed jobless claims are likely to put a small downward pressure on yields.
It may seem absurd for stocks to be influenced by such minor changes in yields, but such are the trading dynamics in an automated factor-trading, correlation-surfing market.
Given flattish indexes, market breadth is quite poor – 80 percent of NYSE volume is in decliners, 60 percent on the Nasdaq – payback for two blowouts to the upside.
As the S&P 500 waffles below last week’s highs and the seasonal shadow encroaches, the VIX catches a slight bit and holds near 18.
Federal Reserve Chair Jerome Powell testifies on Capitol Hill in Washington, DC, on June 22, 2021, during a hearing on the coronavirus crisis by the House Oversight and Reform Select Subcommittee.
The top economist at JPMorgan sees a’significant chance.’ Powell’s tenure as Fed chairman may be coming to an end.
Cramer believes these two stocks — an automaker and a social media company — are good buys.
On April 27, 2021, visitors examine a China-made Tesla Model Y electric vehicle at the Auto Shanghai 2021 show in Shanghai, China.
Tesla skeptic admits that the EV maker’s earnings may outperform the market, giving the stock a short-term boost.
On September 30, 2020, the Boeing Airplanes factory in Everett, Washington, where several models of its commercial aircraft, including the 787 Dreamliner, are manufactured, is pictured.