Credit Suisse names the 'best' sustainable stocks with real momentum

Published Thu, Jul 22 20217:30 PM EDT

Lucy Handley @in/lucy-handley-b2b0a61a/@lucyhandley

Analysts at Credit Suisse have picked the "best" stocks that take ESG (environmental, social and governance) factors into account, providing a list of "Ideas with Impact" that the bank expects to outperform the wider market. The analysts led by Eugene Klerk tracked investment themes that they say correlate with the U.N.'s Sustainable Development Goals and identified those they think are likely to do well, before picking stocks with "quality" and "momentum," or those that have seen price changes or earnings revisions. Themes include green infrastructure, diversity and circular economy. "Based on current quality and momentum scores we find that Healthy living now ranks best," the analysts wrote in a research note published July 12. Stocks under this theme outperformed the MSCI AC World index by 43.2% in 2020, the analysts said. Illnesses — in particular mental health conditions — have been increasing around the world, the analysts said, while the coronavirus pandemic appears to have exacerbated these. According to data from non-profit the Kaiser Family Foundation, quoted by Credit Suisse, 41.1% of U.S. adults reported symptoms of anxiety and/or depression in January 2021, compared with 11% between January and June 2019. Lifestyle shift "The pandemic has provided further strong support for the relevance of a healthy lifestyle," the analysts wrote, and this covers both emerging and developed market, they added. And according to the bank's Emerging Consumer Survey 2021 that researched people in countries including Brazil, China and India, more than 50% say they have eaten more healthily since the start of the pandemic. The analysts included three healthy living stocks on their "Ideas with Impact" list, all of which they rated outperform: Medical device-maker Abbott Laboratories , Chinese clothing manufacturer Shenzhou and bicycle manufacturer Merida Industry . On a separate stock list, "Stocks with Quality and Momentum above 50," (where stocks can score a maximum of 100 for each measure), the analysts included apparel firms Nike , Lululemon and Vans owner VF Corporation , as well as Chinese sportswear company Li Ning , while in travel and leisure its picks were ski operator Vail Resorts , swimming pool company Fluidra and timeshare firm Travel + Leisure Co . "Our discussions with investors indicate that interest in the topic of sustainable thematic investing continues to increase. Specifically investors seem to gravitate towards finding companies that not only sell products and services that help achieve broader goals such as those included as part of the 17 Sustainable Development Goals but that also have good ESG policies and performance," Credit Suisse stated.

So-called "healthy living" stocks are among the best ESG picks right now, according to Credit Suisse.

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