Europe has left all other global regions in the dust when it comes to allocating capital toward stocks that focus on sustainable principles, says Fidelity’s Bill Kennedy, and he sees no signs of this trend trailing off.
“Our research shows that focusing on stocks recommended by our broader team of analysts that follow sustainable practices has a multiyear track record of adding value in international markets, and we’re finding Europe to be jammed full of companies with great management teams,” says Kennedy, portfolio manager of Fidelity® International Discovery Fund (FIGRX).
For example, Kennedy credits management at Switzerland-based pharmaceuticals firm Roche Holding (RHHBY) for making sustainability a big part of the company’s approach. He says the team strives to keep its marketing strategies ethical. He says this approach has helped Roche innovate, as reflected by its strong drug pipeline, which addresses needs in oncology, neurology, and rare diseases. Kennedy adds that the stock’s valuation remains compelling relative to peers.
Denmark’s Vestas Wind Systems (VWSYF) is a pioneer in making turbines used to produce renewable energy, and an industry leader based on its social and governance commitments, according to Kennedy. He notes that wind energy is expected to become a much larger source of all global power generation in the coming decades, and that Vestas has used steady profits derived from recurring services revenue to fund new investments in other renewable sources, such as hydrogen.
Lastly, Kennedy noted Sweden-based Nibe Industrier (NDRBF), a leading maker of electric heat pumps that reduce the carbon intensity of home and business heating—especially if the electricity is generated from green sources. He sees potential for the company to boost both its sales and earnings going forward.
“Across groups of quality, growth, and value stocks, I see Europe as a great place to look for sustainably run companies, many of which are attractively priced as we head into the back half of 2021,” he says.
Fidelity® International Discovery Fund held securities mentioned in this article as of its most recent holdings disclosure. For specific fund information, including holdings, please click on the fund trading symbol above.
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