March 15th, 2021 | 09:03 CET
Bayer, dynaCERT, JinkoSolar - green performance stars!
Sustainable investing has developed from a "nice to have" to a "must-have." Many empirical studies have also shown that investors who invest "green" do not have to forego returns. On the contrary, there are indications that a skillful weighting of ESG factors - these stand for Environment, Social, Governance - can improve the risk-return ratio. We show you three ESG stocks with which you will outperform in the truest sense of the word!
time to read: 3 minutes
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Author:
Carsten Mainitz
ISIN:
DE000BAY0017 , CA26780A1084 , US47759T1007
Table of contents:
"[...] Large tailings piles, such as those created in phosphate production from sedimentary rock, will not exist in our process. [...]" John Passalacqua, CEO and Director, First Phosphate Corp.
Author
Carsten Mainitz
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
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BAYER AG - Synergies take effect earlier than planned
Bayer holds strong market positions worldwide in its two core areas of health care and agribusiness. The life science Company attaches great importance to sustainability. The rating company CSRHub gives the Leverkusen-based Company a score of 74, which "translated" corresponds to a school grade of 2. One issue that has prevented a better sustainability rating and a return to the old high of the share price for some time is the negative consequences of the 2018 acquisition of Monsanto, the US producer of seeds and herbicides, for more than USD 60 billion. In addition, the agricultural industry generally performed worse than forecast, which noticeably affected Bayer as a leading player.
However, the DAX-listed Company is making progress in dealing with the US glyphosate litigation and held out the prospect of a possible settlement at the end of the second quarter. In the past fiscal year, Bayer had to set aside high provisions for these legal disputes, which led to a consolidated loss of EUR 10.5 billion(!). If this "special effect" is disregarded, the operating result (EBITDA) remains constant at EUR 11.5 billion.
A few days ago, the Group made some interesting statements at the Capital Market Day, which should give the stock positive impetus in the coming months. Bayer expects to realize the Monsanto deal's full synergies by the end of the current fiscal year. That is one year earlier than planned. In the next few years, the takeover's successes will become apparent, and the Group will grow more strongly again. In addition, the Leverkusen-based Company will focus even more on innovations in the future. These indicate that the share price should start to rise again after a long, lean period.
The Company is currently worth around EUR 52 billion at a price of around EUR 53. At the upcoming Annual General Meeting on April 27, a proposal has been made to pay a dividend of EUR 2 per share. The Group will then report on the first quarter on May 12. The majority of analysts are optimistic about Bayer stock, with an average target price of EUR 62. In our opinion, the stock has an excellent risk-reward ratio. In 2015, the shares were still trading at around EUR 140!
DYNACERT INC - a favorable hydrogen share
The topic of hydrogen is in vogue on the stock market. In the second tier, investors will find an exciting cleantech Company from Canada. For dynaCERT, sustainability is a top priority. The Company has created a patented hydrogen technology solution for retrofitting diesel engines. This technology can significantly reduce fuel consumption and pollutant emissions. It is already used in many vehicles, including fleets. However, the Company offers another added value for customers. The Canadians have developed their software to measure and optimize fuel consumption.
This year, dynaCERT achieved two necessary strategic steps. In January, it entered into a strategic collaboration with Harold Martin for the OEM segment. The collaboration is about moving dynaCERT's solutions for suppliers in the automotive industry toward industrial production readiness. Last month, the Canadians announced they were in deep discussions with Verra. Verra oversees the world's most extensive emissions certification program and the related creation of carbon credits.
The stock is now trading at CAD 0.53 after rising to CAD 0.85 at the beginning of the year. The Company currently has a market capitalization of CAD 202 million. According to GBC Research analysts, the current level offers a good entry point, as the experts calculate a price target of CAD 2.20!
JINKOSOLAR HOLDING CO LTD - Catching up with ESG
JinkoSolar is one of the largest and most innovative solar module manufacturers in the world. The Company has built a vertically integrated solar product value chain with significant capacity. Sales take place globally, with the main sales markets being China and the United States.
The Group still has some homework to do when it comes to sustainability - despite green technology. CSRHub only gives the Company an average grade. It doesn't help (yet) that the Group has reported sustainability progress very often in recent weeks.
However, it is undisputed that the share has performed exceptionally well for a long time. The Company is currently valued at USD 2.2 billion. However, the majority of analysts consider the shares to be exhausted at the moment. Operationally, JinkoSolar is doing well. However, it is currently more important that the "sustainability" parameter improves significantly. At the current level, the Company is not investable for many ESG investors.
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