5 Cheap ESG Stocks To Invest In

2. Flex Ltd. (NASDAQ:FLEX)

Number of Hedge Fund Holders: 43 

PE Ratio: 8.57   

Flex Ltd. (NASDAQ:FLEX) announced on October 18 that it had purchased Anord Mardix, a critical power distributor, from investment firm Bertram Capital in a deal worth $540 million. The purchase is part of a plan to expand presence in the data center market. The company offers electronic manufacturing services to original equipment manufacturers. It is headquartered in Singapore and was founded in 1990. In 2020, the firm achieved 92% growth in sustainable energy use year-on-year and even used ESG standards to screen all new global suppliers it conducted business with. 

In May, investment advisory Citi reiterated a Buy rating on Flex Ltd. (NASDAQ:FLEX) stock and raised the price target to $25 from $22, noting that the new management had the ability to unlock “value and gems” within the business. 

At the end of the second quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $1.4 billion in Flex Ltd. (NASDAQ:FLEX), down from 48 the preceding quarter worth $1.6 billion.

In its Q4 2020 investor letter, Sound Shore Management, an asset management firm, highlighted a few stocks and Flex Ltd. (NASDAQ:FLEX) was one of them. Here is what the fund said:

“Our third quarter addition of contract manufacturer Flex provides a great example. Originally an electronics-focused outsource manufacturer with highly cyclical cash flows and short product lifecycles, the company has evolved its customer base toward the capital goods, automotive and healthcare industries. Having successfully recast itself as a longer-cycle, “new industrial,” Flex’s stock is benefitting from more stable and diversified cash flows and more consistent revenue growth. CEO Revathi Advaithi joined in early 2019 and she has refocused the company by accelerating the transition to these longer-cycle businesses. Moreover, the company has been shareholder oriented, using the company’s ample free cash to reduce shares outstanding by 35% in the last decade. Lastly, Flex’s Nextracker division should provide nice upside. The solar tracking company manufactures motors, software and systems for utility-scale power generation projects and business is growing quickly as the shift toward sustainable energy sources hastens. We believe Nextracker is underappreciated and could represent a significant amount of hidden value. At 13 times earnings Flex is a very attractive risk reward opportunity.”