Four Stocks To Make You Feel Good All Over
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Maybe you've resolved this is the year to make your portfolio more socially responsible. Your first problem is deciding what socially responsible means to you. Is it the way a company treats its employees, how environmentally conscious it is, how it ranks on human rights, how philanthropic it is, or its corporate governance. All admirable metrics, to be sure and there are many others but Corporate Responsibility Magazine has done some of the work for you with their 2012 Best Corporate Citizen rankings. Even better several of the following companies have decent yields.
Big Pharma=Good Karma
Top of the list might be a surprise to you with Bristol Myers Squibb (NYSE: BMY) taking the top spot. It has a 4.3% yield and a 29.16 P/E. Why buy Bristol Myers aside from its being a good corporate citizen? There are reasons not to, like the loss of patent protection for Plavix and the lackluster Q3 earnings results, a miss of 2.40%, although they guided to the higher end of the range.
Its pipeline is looking good for FDA approval of Eliquis for treatment and prevention of venous thrombolic disorders, possibly in March. Jim Cramer likes Bristol Myers for this reason. Eliquis is an important approval for Bristol Myers after it paid $2.5 billion earlier this year for Inhibitex and its experimental hepatitis C drug and then had to suspend development after serious adverse reactions including one patient death. Corporate governance risks are low, but analysts only see 2.59% growth over the next five years.
Competitor Abbott Laboratories (NYSE: ABT) came in at number 20 but it ranked number one in corporate governance and number two in philanthropy. Abbott is splitting itself up in January 2013, but as I wrote before it looks like Abbott Labs is keeping the lion's share of the good stuff: the nutritionals, the medical devices, generics, and diagnostics. Abbott Labs currently trades at a 16 P/E and is a Dividend Aristocrat with dividend raises for 40 consecutive years. Fellow Fool RJ Towner likes Abbott Labs' established Pharmaceuticals and the nutritionals, but notes the yield is likely to be 2% or lower after the split and AbbVie may be the momentum name investors gravitate toward.
Techs Are Good As Gold
International Business Machines came in as the number 2 Corporate Citizen and Intel Corporation (NASDAQ: INTC) and Microsoft tied at number 3. Intel is number one when it comes to employee relations. Of these three, Intel has the highest yield at 4.30%, much higher than IBM's at 1.80% and has a much lower P/E at 9.00.
Intel is down almost a third from its 52 week high as the semiconductor giant of the PC space sees a long term trend away from PCs. Despite a move into mobile handsets planned for next year, Intel may see resistance from handset makers as their Trigate Transistors cost more than twice as much as current chips.
Intel was upgraded by Standpoint Research from hold to buy on Nov. 16, but the average mean price target by analysts is $23.00 for just a little over 10% upside; analysts expect growth at 11.83% over the next five years. The short interest has grown by 10% for a name that has a 22.13% profit margin. One other possible growth path for Intel is a move into IBM's space. Fool Selena Maranjian likes Intel as a dividend play in the New Year and considers it undervalued at current levels.
An Industrial That's Socially Responsible
Johnson Controls (NYSE: JCI) came in as Corporate Citizen number five. While its corporate governance risks were low for audit and shareholder rights they were high for board and compensation. Johnson Controls earned a number 2 ranking for its environmental policies.
The company has a 16.92 P/E and a forward P/E of 9.45. It's in the building efficiency space as well as power solutions, meaning batteries, but is best known as the largest US auto parts manufacturer so it's a double play on any housing and auto recoveries in the US. Over half its revenues come from auto parts and most of that from the US.
Johnson Controls has a 2.50% yield at a 40% payout ratio. At an analyst day on Dec. 19 the company gave 2013 profit forecasts above analysts expectations of $2.59 a share and said they plan a major surge in the introduction of new products. The company sees growth in the US and Chinese auto markets to outpace Europe.
Caveats include a series of downgrades this last year but all are to hold or sector perform, revealing a slight decline in analyst bullishness. Analysts expect 10.92% growth over the next five years.
Resolve to Feel Good and Make Money
Socially responsible investing doesn't have to hurt. You can make money, get dividends, and assuage your conscience at the same time. In fact, it's better to make money on good citizens instead of rewarding flawed business models that are responsible but not sustainable. As with any other stock make sure your angel company still has a profit motive. These companies above are a good start for the New Year.
leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Intel. Motley Fool newsletter services recommend Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!