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Five Socially Responsible Stocks For August 22

Posted: Aug 22, 2008 12:00 PM by Glenn Curtis

Tickers in this Article: EDS, HRB, COP, A, ADBE

Most individual investors share an obvious, common goal - they want to make money. However, that doesn't mean that making money is the only goal investors want to accomplish. Many investors are concerned with political and ethical issues as well, and spend a good deal of time and resources in pursuit of these more personal goals.

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It should come as no surprise then that investors have carved out a niche strategy within the market known as "socially responsible investing", in order to align their political and ethical goals with their economic aspirations. (To learn more, check out Change The World One Investment At A Time.)

What Is A Socially Responsible Investment?
Socially responsible investments will differ for each investor according to his or her convictions. One investor may feel there is nothing wrong with a particular company's line of work or business practices, while another may consider the company entirely unethical. While there is no universal set of characteristics that define a socially responsible stock, there are certain themes that tend to be commonly associated with socially responsible investing.

First off, socially responsible investors typically prefer to avoid making investments in companies that engage in the production or sale of alcoholic beverages, tobacco products, gambling or sports betting activities, adult entertainment, and tools of warfare or violence (guns, bullets, bombs, etc.). (To learn more about these types of investments, read Extreme Socially Responsible Investing and Working With Islamic Finance.)

As well, socially responsible investors typically seek to invest in companies that possess a healthy amount of environmental responsibility and contribute to environmental sustainability, renewable energy and clean technology.

Social Responsibility, Indexed
While it is of course a subjective decision to label any one company socially responsible or not, the Dow Jones Sustainability United States Index provides investors who are interested in making socially responsible investments an easy way to produce a shortlist of companies that are generally regarded as among the most socially responsible public companies. The index is reviewed quarterly, in order to stay up to date with the changing business environment.

This can be particularly useful for individual investors, since researching all the aspects of a large company's operations and business practices in order to rule out the existence of any socially irresponsible activity can be quite time-consuming. In other words, limiting your investment selections to companies listed on an index such as this will likely not create an investment portfolio that perfectly matches all of your political and ethical concerns, but it will ensure that your investment capital goes into companies that are regarded as socially responsible on average compared to most companies.

Responsible But Still Profitable
Investors, however, don't want to suffer losses on their investments, even if they are socially responsible ones. With that in mind, here are five stocks currently listed on the Dow Jones Sustainability United States Index that have produced positive returns over the past year.

Company	52-Week Price Change	Market Cap
Adobe Systems (Nasdaq:ADBE)	8.61%	$23.5B
Agilent Technologies (NYSE:A)	1.22%	$12.4B
ConocoPhillips (NYSE:COP)	2.47%	$122.9B
Electronic Data Systems (NYSE:EDS)	6.95%	$12.6B
HR Block (NYSE:HRB)	28.24%	$8.2B
Data as of market close August 20, 2008

ConocoPhillips
Based in the great state of Texas, Conoco is in the oil business. More specifically it has its hands in exploration and production as well as in refining. Now I know what you are probably thinking folks, how can an oil related company be considered socially responsible?

Actually a quick gander at its website suggests that Concoco is indeed conscious of the environment and is doing some things to leave the world a better place. It is interested in developing new energy sources for the future and in conserving what is available now. Many of its fund raising efforts are centered around national parks. For more on what the company is involved in, visit Conoco's website. I think it's worth a read.

From an investment standpoint it doesn't look too shabby either. The company is coming off a solid second quarter where it beat analyst estimates. Conoco is expected to have earnings per share of $13.13 this year and $13.96 a share next year according to Yahoo Finance. That means the company trades with a P/E of about 6.5 times the current year estimate (with the stock at about $85). That turns my head.

The downside
While oil is pretty much a finite resource, its price will likely ebb and flow. In other words while it might be hot now, there's no guarantee it'll be hot a week, a month, or a year or so from now.

What do you think of socially responsible investing? Are any of these socially responsible stocks prudent investments? Join in the FREE Stock Picking Community to share your thoughts and see what other investors are saying.

By Glenn Curtis

Glenn Curtis started his career in the 1990s as an equity analyst for a regional firm in New Jersey. There, he covered companies in the technology, entertainment, and gaming industries. Curtis has since worked as a financial writer at a series of both web and print publications, including TheStreet.com and Registered Rep Magazine. He has held his series 6,7,24, and 63 securities licenses.

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