ASX shares are, as a whole, kicking off 2024 with a rather lacklustre performance.
After gaining 8.4% in 2023, the All Ordinaries Index (ASX: XAO) is down 0.8% since the closing bell on 29 January.
But the year is young. And there are literally thousands of potentially profitable ASX shares to investigate.
If you're looking to invest in companies that, atop hopefully gaining in value, also work to improve the world, then you'll want to know what Andy Gracey, portfolio manager of the Emerging Companies and the Australian Shares Fund at Australian Ethical Investment, told The Motley Fool earlier this week.
And according to Gracey, investing in ethical ASX shares shouldn't lead to lower returns.
"We believe investors don't have to sacrifice investment returns while investing in more progressive companies that leave the world in a better place," he said.
With that said…
ASX share leading the renewable charge
The first stock Gracey believes is positioned to outperform in 2024 is ASX energy share Contact Energy Ltd (ASX: CEN).
"We remain believers in Contact Energy which is a renewable energy generator and retailer out of New Zealand," Gracey told us.
He noted that New Zealand's energy transition now sees some 80% of the nation's energy generated from renewable sources.
Gracey added:
We believe the transition will grow the overall energy market 3% to 4% per annum as electric vehicles and electrical applications progressively displace petrol and diesel. Contact Energy trades on reasonable earnings multiples with a credible dividend yield.
The ethical ASX share has gained 2% over the past 12 months.
As of Thursday's closing price, Contact Energy shares trade on a trailing dividend yield of 4.1%, unfranked.
An ethical ASX travel stock
The second ethical ASX share Gracey is bullish on for 2024 is travel stock Webjet Ltd (ASX: WEB).
"Webjet is both a domestic online travel booking business and a much larger business to business hotels, and beds booking business," he said.
He said his fund is "attracted to the growing long-term thematic around leisure travel and particularly the WebBeds hotel rooms market-place business".
As for the growth outlook, he added, "We believe WebBeds can grow its circa 4% global market share into a bigger business and investors are paying a reasonable earnings multiple for the business today."
The Webjet share price is up 6% over 12 months. The company suspended its dividend payments in 2020 following the outbreak of the COVID pandemic.
A pivotal year ahead for this ASX share
The third ethical ASX share Gracey has an optimistic outlook on is biotech company Immutep Ltd (ASX: IMM). His fund has a holding in the immunotherapy drug developer.
According to Gracey, "Immutep should have a pivotal year in 2024. We expect to see continued strong clinical data in lung cancer as well as head and neck cancer treatments."
He added:
Immutep is the number two globally in clinical development of a new class of immunotherapy called LAG3. To date this has shown to enhance the clinical efficacy of cancer treatments, with few safety issues when combined with the global leading immunotherapy Keytruda, which is owned by pharmaceutical giant Merck.
This ethical ASX share has gained 21% over the past 12 months.
