2 ESG Stocks to Buy and Hold in 2022

Companies are increasingly focusing on environmental, social, and governance (ESG) norms as the world shifts rapidly toward more sustainable lifestyles and business practices. In addition, concerns about climate change and the need for socially responsible business practices have increased the importance of ESG investing.

Increased investor interest, a sharper corporate focus, and significant improvements in data provision are all expected to fuel the growth of sustainable investing. Investors’ interest in ESG investing is evident from the Vanguard ESG U.S. Stock ETF’s (ESGV) 8.7% gains over the past month.

Given this backdrop, we think it could be wise to add fundamentally-sound ESG stocks Microsoft Corporation (MSFT) and Adobe Inc. (ADBE) to one’s portfolio now.

Microsoft Corporation (MSFT)

MSFT, a global technology giant, creates, licenses, and provides support for software, services, products, and solutions. Productivity and Business Processes; Intelligent Clouds; and More Personal Computing are the three operational segments of the company.

This month, Barclays Bank PLC (BCS) and MSFT announced that Barclays had selected Microsoft Teams as its preferred collaboration platform, enabling collaboration for more than 120,000 colleagues and service partners in key locations worldwide.

Also, this month, Volpara Health Technologies, a global leader in health technology software that offers an integrated platform for personalized breast care, announced a new research and development agreement with MSFT to accelerate the development of a solution that detects and quantifies breast arterial calcifications (BAC). The collaboration demonstrates a dedication to advancing women's health through science and innovation.

MSFT's total revenues increased 12.4% from the year-ago value to $51.87 billion for the fourth quarter ended June 30, 2022. Its operating income grew 7.5% year-over-year to $20.53 billion. The company's net income surged 1.7% from the prior-year quarter to $16.74 billion, while its EPS amounted to $2.23.

Analysts expect the EPS to increase 12.3% year-over-year to $10.34 in fiscal 2022. The consensus revenue estimate of $220.87 billion in fiscal 2022 represents an 11.4% increase from the same period last year. The stock has gained 9.1% over the past month and 7.3% over the past three months.

MSFT's POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

MSFT also has a B grade for Stability and Quality. Within the Software – Business industry, it is ranked #11 of 55 stocks. Click here to see additional POWR Ratings for Sentiment, Value, Momentum, and Growth for MSFT.

Adobe Inc. (ADBE)

ADBE operates on a global scale as a multifaceted software company. It operates in three divisions: Digital Media; Digital Experience; and Publishing and Advertising.

This month, ADBE and FC Bayern, one of the world's most historic and successful football clubs, have announced a multi-year partnership to power the club's digital transformation. Through Adobe's enterprise solutions, the partnership will bring new, personalized experiences to its millions of current and future global fans - both on and offline - while driving greater efficiency and more sustainable business practices.

In June, ADBE announced enhancements to Adobe Real-Time CDP, its customer data platform (CDP), to assist brands in transitioning from third-party cookies to first-party data. Adobe Real-Time CDP is being adopted by businesses across all industries. The company is introducing enriched customer profiles with commerce, AI-powered targeting, new privacy and security tools, and Segment Match across channels.

For the second quarter ended June 03, 2022, ADBE's total revenue increased 14.4% from the year-ago value to $4.38 billion. Its operating income grew 8.7% year-over-year to $1.53 billion. The company's net income surged 5.6% from the prior-year quarter to $1.18 billion, while its EPS rose 7.3% year-over-year to $2.49.

ADBE’s EPS is expected to grow at the rate of 14.2% per annum over the next five years. The consensus revenue estimate of $17.67 billion in fiscal 2022 represents an 11.9% increase from the same period last year. The stock has gained 12.6% over the past month.

It is no surprise that ADBE has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Quality and a B for Sentiment. In the Software - Application industry, it is ranked #32 of 154 stocks.

Beyond the POWR Ratings grades I have just highlighted, you can view ADBE ratings for Momentum, Growth, Value, and Stability.

MSFT shares were trading at $288.40 per share on Thursday morning, down $0.76 (-0.26%). Year-to-date, MSFT has declined -13.87%, versus a -10.11% rise in the benchmark S&P 500 index during the same period.

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

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