There is a growing trend for both customers and investors to choose shares that are doing some sort of good for the world, or at least avoiding the ones that are seen as unhelpful to society. Broker Morgan Stanley has done some analysis, according to the AFR, of the businesses on the ASX200 that are treating employees well and have an equitable and sustainable business model delivering benefits for the broader economy. The good thing about treating your employees better, which doesn’t just mean more money, usually means you get motivated employees who deliver better growth for the overall business….
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There is a growing trend for both customers and investors to choose shares that are doing some sort of good for the world, or at least avoiding the ones that are seen as unhelpful to society.
Broker Morgan Stanley has done some analysis, according to the AFR, of the businesses on the ASX200 that are treating employees well and have an equitable and sustainable business model delivering benefits for the broader economy.
The good thing about treating your employees better, which doesn’t just mean more money, usually means you get motivated employees who deliver better growth for the overall business.
Morgan Stanley identified three companies that are creating good shareholder value, operating in industries with tailwinds and demand for the offering is strong:
Sonic Healthcare Limited (ASX: SHL)
Morgan Stanley said that Sonic is “well-positioned to benefit from ongoing demand for early medical intervention via diagnostics as the population ages, as early medical diagnosis can reduce patients’ long-term health care costs”.
Sonic is also able to benefit from technological advancement and can offer more (and higher-costing) pathology services. The company has a higher level of female employees and it offers a high level of pay for the sector.
It’s currently trading at 22x FY19’s estimated earnings.
Cochlear Limited (ASX: COH)
Obviously Cochlear wants to make a profit, but creating the products that allow people to hear and improves their lives substantially is a very worthy pursuit.
Morgan Stanley thinks that there is upside for Cochlear as 150,000 people transition from moderate hearing implants to severe hearing loss implants.
It has generated significant returns for shareholders over the past year with the share price going from $151 to $208.
It’s currently trading at 41x FY19’s estimated earnings, which is pricey.
Lendlease Group (ASX: LLC)
Lendlease is expanding its business to areas like affordable housing, build-to-rent housing and an increase in retirement village operations. It also gives its employees a high level of pay.
The company is projected to benefit significantly from the construction boom that is occurring across Australia over the coming years.
It’s currently trading at 14x FY19’s estimated earnings.
Although all three of these businesses are doing good for shareholders and the wider economy.
It’s hard to say that Sonic and Cochlear are good value today when they’re trading at high valuations compared to their expected growth in the near-term. Lendlease looks like an interesting option considering a lot of the construction will go ahead regardless of any relative economic dips.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Cochlear Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.