Analysts love these ESG stocks.
A growing number of tech stock investors have come to see their portfolios as more than a way to make money in the market. Investing can also be a way for the average person to change the world for the better in a small way. By supporting tech companies that prioritize environmental and social values, investors can force companies to seriously consider more than just their bottom lines. Bank of America recently came out with a brand-new environmental, social and governance rating system. These eight tech stocks are both excellent investments and highly rated companies based on ESG principles.
Microsoft Corp. (ticker: MSFT)
Even at a $1.8 trillion market cap, software and cloud services giant Microsoft continues to put up impressive growth numbers. Microsoft recently reported fiscal 2021 second-quarter revenue growth of 16.7% and net income growth of 32.7%. Microsoft’s Intelligent Cloud segment revenue, which includes Azure public cloud, was up 23%. Analyst Brad Sills says Azure is landing large enterprise deals, which is particularly bullish for the long term. The shift toward cloud revenue should continue to boost margins. In addition to its high ESG score, Bank of America has a “buy” rating and a $280 price target for MSFT stock.
Credit card giant Visa has struggled throughout the economic downturn of the past year. However, analyst Jason Kupferberg says greener pastures may finally be just around the corner. Visa could be a major stimulus package beneficiary as Americans spend their checks in the coming weeks. Management anticipates pent-up demand for leisure travel spending as the vaccine rollout progresses. Kupferberg says Visa is “well positioned for a post-pandemic recovery,” which is not fully reflected in Visa’s undervalued stock. Bank of America has given Visa a high ESG score and has a “buy” rating and a $234 price target for V stock.
Shares of high-end graphics and video processing chipmaker Nvidia have generated an overall gain of more than 1,500% in the past five years. The global health crisis didn’t even knock Nvidia off its game, and the stock has once again doubled in the past 12 months. Analyst Vivek Arya says Nvidia’s gaming and data center businesses are booming, and the company has high exposure to some of the biggest long-term growth themes in the tech sector, including artificial intelligence and next-generation auto technology. Bank of America has a “buy” rating and a $625 price target for NVDA stock.
Kupferberg says investors aren’t fully appreciating how well positioned Mastercard is to thrive during an economic recovery. Kupferberg expects Mastercard to put up some big numbers in the coming quarters, especially in the second half of 2021. Cross-border sales are finally starting to pick up outside of Europe, which is good news for Mastercard’s most profitable business. The combination of accelerating spending and weakening year-over-year comparisons paves an easy path forward for Mastercard, Kupferberg says. He projects 34.2% earnings-per-share growth this year. Bank of America has a “buy” rating and a $400 price target for MA stock.
While credit card giants Mastercard and Visa have struggled in the past year, digital payment leader PayPal has thrived in a socially distanced environment. PayPal shares are up nearly 140% in the past 12 months, and Kupferberg says there’s still plenty of upside remaining. PayPal management recently updated its long-term guidance. The company is targeting compound annual growth of 22% in EPS, 25% in total payment volume and 20% in organic revenue through 2025. Kupferberg says these targets are certainly within reach given PayPal’s excellent execution. Bank of America has a “buy” rating and a $323 price target for PYPL stock.
Salesforce.com is the global leader in cloud-based customer relationship management services. Sills says Salesforce is one of his top overall stock picks, and the company is driving the digitization of corporate front offices. Sills says Salesforce’s sales, marketing, support and e-commerce businesses represent a collective $62 billion long-term opportunity. Also, the company’s competitive advantage suggests Salesforce could expand its 15% share in these markets over time. Sills projects at least 17% annual organic revenue growth in the years ahead. Bank of America has a “buy” rating and a $300 price target for CRM stock.
Cisco Systems (CSCO)
Cisco Systems designs and sells a range of networking, security and cloud technology and software. Analyst Tal Liani says there are plenty of things to like about Cisco’s recent earnings report, including more than 100% growth in cloud orders, which now represent about 25% of Cisco’s total service provider sales. Security sales were also up 10% from a year ago, and demand for Nexus and Catalyst 9K switches is growing. Enterprise orders dropped 9%, but Liani says Enterprise and service provider sales should improve throughout 2021. Bank of America has a “buy” rating and a $55 price target for CSCO stock.
Texas Instruments (TXN)
Texas Instruments is one of the world’s largest semiconductor producers, specializing in embedded processing products. The semiconductor industry faces widespread supply constraints in 2021, but Arya says Texas Instruments is well positioned to avoid most of the fallout. He says Texas Instrument’s 40% free cash flow margins are unmatched among its peers, and he believes the company has a strong enough balance sheet to boost both its buybacks and 2.2% dividend in coming years. He is bullish on the company’s resilience throughout the downturn. Bank of America has a “buy” rating and a $200 price target for TXN stock.
Eight ESG stocks with ‘buy’ ratings:
— Microsoft Corp. (MSFT)
— Visa (V)
— Nvidia (NVDA)
— Mastercard (MA)
— PayPal (PYPL)
— Salesforce (CRM)
— Cisco Systems (CSCO)
— Texas Instruments (TXN)
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