Trends: Gender diversity pays off
It's no secret that men still control certain areas of society.
And corporate America is one of them, said Pam Evason, managing director of Windermere Wealth Advisors LLC in Milwaukee.
Recent studies by Catalyst, a nonprofit organization focused on advancing women in the workplace, show how pervasive men's control is. Women hold just 4.4% of chief executive officer jobs and less than 20% of board seats at Fortune 500 companies, Catalyst's research shows
Yet there is a business case for gender diversity, Evason said.
Having greater diversity in the executive suite is significantly correlated with measures of financial success, such as gross margins, a 2016 Peterson Institute study of 21,980 firms from 91 countries said. Return on equity and net profit margin of companies with at least three female directors were significantly stronger than for companies with less diverse boards, according to "Does the Gender of Directors Matter," a 2013 Harvard University study.
"Being a female professional and business owner who serves on a variety of nonprofit boards, I have seen firsthand that diversity of opinions from all sources, including gender, is hugely beneficial," Evason said.
Gender diversity is just one screen she uses to evaluate stocks. But Evason said it is one that can help find compelling opportunities.
Facebook, Inc. (FB, $125.15), Menlo Park, Calif., operates a global social media platform.
Sheryl Sandberg, Facebook's chief operating officer, is the author of the bestselling book about women in the workforce called "Lean In: Women, Work, and the Will to Lead." So it came as no surprise to Evason that Facebook has strong female leadership, she said.
Women represent 23% of Facebook's leadership team and 38% of its board, Evason said. While Facebook admits it has more work to do regarding diversity, it still outpaces its Standard & Poor's 500 index peers, she said. And having Sandberg in one of the top positions at the company ensures that diversity will remain a "top of mind" issue, she added.
From a pure investment perspective, Facebook is compelling because of its ongoing user growth, increasing share of advertising dollars and movement into live video and content creation, Evason said.
The biggest risk here is competition from emerging social media platforms like Snapchat that might cut into Facebook's user base, she said.
The shares have a 52-week trading range of $72.00 to $128.33. They could reach as high as $140 in the next 12 months, Evason said.
Pepsico Inc. (PEP, $108.66), Purchase, NY, is a global food and beverage company.
Indra Nooyi has been Pepsico's chief executive officer since 2001, and was rated one of Forbes' Most Powerful Women and one of Time's 100 most influential people, Evason said. Women represent 38% of the company's leadership team and 33% of its board — both above average among S&P 500 companies, she said.
Pepsico's ongoing focus on nutrition and product diversification and innovation, along with increasing global sales volumes and a dividend yield approaching 3% also make this a great investment idea, Evason said.
The biggest risk here is the possibility of further slowing in the economy, which would hurt consumer purchases of discretionary products, she said.
These shares have a 52-week trading range of $76.48 to $110.94. They have potential to reach as high as $120 in the next 18 months, Evason said.
The Procter & Gamble Co. (PG, $85.78 ), Cincinnati, makes and sells branded consumer packaged products worldwide.
Procter & Gamble is "deeply committed" to gender diversity, with women filling 45% of management roles and roughly 30% of senior executive jobs and board seats, Evason said. The company also spent more than $2.6 billion with women- and minority-owned businesses in its supplier network last year, she said.
Procter & Gamble, one of the most respected consumer product companies, gets more than 60% of revenue from outside the U.S. — an appealing figure, given population growth expectations in foreign countries, Evason said. The company is also a longtime dividend payer, with a yield that is currently above 3%, she said.
The biggest risk is the possibility that the U.S. dollar could continue to strengthen, creating a headwind for P&G's export growth, Evason said.
The shares have a 52-week trading range of $65.02 to $87.15. They could reach as high as $95 in the next 18 months, she said.
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The Journal Sentinel focuses on one Wisconsin money manager or analyst in this weekly feature, looking at a trend that helps investment pros make their decisions.