Valuable ESG stocks

These three sustainable Canadian companies are on sale

Andrew Willis 21 April, 2020 | 1:31AM
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This video is part of our Earth Week special report

Andrew Willis: There’s something to be said about the quality of a company that can sustainably arrange its affairs. In Canada, many companies with low ESG risk scores got swept up in the coronavirus selloff, unlocking some four- and five- star opportunities worth considering. To find these stocks, we used the ESG risk score from Sustainalytics of between 1 and 100 – the lower the better – and compared it to the Morningstar star ratings of Canadian companies.

First up, is four-star Canadian financier Power Corp [POW], with an ESG risk score of 11. Power Corp derives a significant amount of its value from household Canadian insurance brand, Great West Life. Sustainalytics says insurance companies play a pivotal role in supporting sustainable communities, and at Morningstar, we see an opportunity to invest in this particular effort at a current discount of 22%.

Next up is five-star Canadian t-shirt king Gildan [GIL], with an ESG risk score of 11. Sustainalytics says they’re a leader in ‘slow fashion’, a trend that puts sustainability and workers' rights ahead of being first to market at the lowest cost. Consumers are increasingly willing to pay more for products that are responsibly made, reflecting in greater margins and value for this stock coming in at a 21% discount.

Finally there’s five-star Ski-Doo and Sea-Doo maker, BRP [DOO]. At 15, its ESG risk score is a little higher than the others, but no less an ode to a comprehensive ESG policy that dissects, disclosures and seeks to improve each risk – from its supply chain, to its employees and environmental impact. Coming in at a 40% discount to current prices, we do see COVID-19 taking a toll on the stock, but remain optimistic about long-term, sustainable growth.

For Morningstar, I’m Andrew Willis.


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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
BRP Inc86.00 CAD0.23Rating
Gildan Activewear Inc37.90 USD0.03Rating
Power Corporation of Canada Shs Subord.Voting37.84 CAD-0.21Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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