There’s a flipside to shareholder-friendly stocks expected to underperform the market: highfliers that pay little heed to their owners' interests. But there are also top-flight companies that treat their shareholders with respect.
Institutional Shareholder Services -- the big name in corporate proxies -- measures how well a company performs in as many as 63 categories, covering four broad areas. Moreover, each company is scored relative to its market index and its industry group. It assigns the stocks a rating that it calls its Corporate Governance Quotient, or CGQ.
Some evidence supports the notion that companies with weaker governance have higher risk, decreased profitability, and lower valuations. We'll be looking at stocks that Motley Fool CAPS investors have marked to outperform the market and which also sport above-average CGQ scores, either in their Index group or among industry peers.
|
Company |
CAPS Rating (out of 5) |
Index CGQ Ranking* |
Industry CGQ Ranking* |
|---|---|---|---|
|
Duke Energy |
***** |
83% |
90.4% |
|
DuPont |
***** |
84.2% |
97.3% |
|
EMC |
***** |
92.5% |
99.5% |
|
Fuel-Tech |
**** |
56.5% |
56.3% |
|
Indevus Pharmaceuticals |
**** |
74.6% |
81.4% |
Sources: Yahoo! Finance, Motley Fool CAPS.
*Relative placement when compared to companies in index or industry. Higher is better.
Although finding good companies and holding them for the long term is one of the greatest secrets to investing, there are many factors that an investor should consider in evaluating a company -- and how well it treats shareholders shouldn't be least among them. View these rankings as a way to gauge how these businesses stack up against one another relative to their shareholder policies.
Go to the head of the class
Maybe Cisco
That kind of growth was reflected in the sentiments of CAPS member dplan4money, who highlights the continued need for storage among businesses:
Storage is essential in today's ever-expanding market for information. The more companies demand information, the larger the need for storage of that information. Given the need for companies to maintain efficiency, I don't see where EMC's basic business falls off. As for growth, [VMware] is still going to expand the market-even with Microsoft's competition.
Duke Energy is seeking to expand its presence in the solar industry, wanting to place panels in as many as 850 sites, both commercial and residential, over then next two years. That kind of commitment to alternative energy by the utility has CAPS member rssugg believing it will continue to earn a great return for investors while also ensuring its own viability:
A reinvestment in energy, particularly nuclear and alternative, have been aligning with this Fortune 500 companies ivesment profile in hydro, nublear, wind, and solar. Partnerships undertaken by company ensure great return and staying power.
There's been a lot of consternation among investors concerning Indevus Pharmaceuticals. The company’s hypergonadism drug, Nebido, needs additional testing, and shares are plummeting from their highs of more than $8. Getting less attention, however, was the patent protection Indevus won for its bladder treatment drug, Sanctura, which CAPS member waewens feels will be a winner because of the growing need for it from the biotech's target population:
Indevus Pharmaceuticals said Wednesday the drug Sanctura XR, which is used to treat overactive bladder, has received nearly 17 years worth of patent protection in the U.S.
The patent issued by the U.S. government protects the once-a-day treatment through January 2025. The will have a good revenue stream because of the growth of older population using this drug because of overactive bladder.
A Foolish quotient
Many factors go into whether a stock is a buy or sell, but do corporate governance policies enter into your equation? It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.
