We recently compiled a list of the 11 Cheap ESG Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Flex Ltd. (NASDAQ:FLEX) stands against the other cheap ESG stocks.
These days, it seems like everyone wants to wear the “saving the world” cape. Whether this urge to make a real impact on the world stems from a desire to ride the social trend wave or simply out of genuine concern is, well, a debate for another day. For now, let’s focus on the fact that all companies must adhere to Corporate Social Responsibility (CSR) by law.
In other words, ESG companies are those that incorporate Environmental, Social, and Governance factors into their operations and decision-making. This framework is utilized to measure an organization’s practices and performance on sustainability and ethical grounds. In capital markets, some investors employ ESG criteria to assess companies and make their investment decisions accordingly, a practice known as ESG investing. While investing delivers financial returns, ESG investing offers both financial returns and societal impacts, and that’s what is most valued by some investors.
Some believe ESG investing is aligned with reduced risk exposure, stakeholder interests, and superior returns. Not only attractive in theory, but there are reports that back this form of investing. For instance, the Sustainability Megatrends Report by Cushman & Wakefield reveals that ESG companies are gaining traction from institutional investors. A survey of 250 institutional investors indicated that around 60% noted higher performance yield from ESG investments, and 78% were willing to pay higher premiums for these funds.
“Institutional investors are showing increased demand for properties with strong ESG-related management and activities,” the report underscores.
A US SIF “Trends Report” reveals that out of the US market size of $52.5 trillion, $6.5 trillion (12%) is identified as a sustainable or ESG investment. Having said that, as many as 73% of respondents believe the sustainable investment market will grow over the next few years. Therefore, community investing continues to shine with rising enthusiasm across several types of investors.
ESG companies are mainly ranked by third-party ranking agencies based on how well they perform across Environmental, Social, and Governance indicators. Using standardized metrics, proprietary models, and disclosures, the companies are then assessed and compared. Among the most notable agencies are MSCI, Sustainalytics (by Morningstar), Refinitiv ESG Scores, and S&P Global ESG Scores. In this analysis, we have used the ratings by Sustainalytics, which covers over 15,000 firms across 42 industries globally. The firm recently disclosed its 2025 list of ESG Top-Rated Companies, identifying Global 50 Top-Rated companies and other regional and industry leaders. Given this, we will take a look at some of the best ESG stocks to consider.
Our Methodology:
We have compiled a list of 11 companies ranked by Sustainalytics (by Morningstar) in its recent ESG Top-Rated Companies report. From the report, we identified companies with a forward P/E less than 15, extracted from FINVIZ. From there, we picked companies with the highest number of hedge fund investors, as per Insider Monkey’s database of Q4 2024. From less preferred to highly preferred, according to hedge funds, the selected stocks are listed in either the global, regional, or industry standings in the report.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An engineer with a pen and paper designing a switchgear circuit diagram.
Flex Ltd. (NASDAQ:FLEX)
Number of Hedge funds holding: 52
Forward P/E as of May 06, 2025: 12.96
Flex Ltd. (NASDAQ:FLEX) operates as a contract manufacturing company that offers design, manufacturing, and product management solutions to electronic and technology companies. While the Flex Agility Solutions (FAS) segment is centered on communications, consumer devices, and lifestyle, the Flex Reliability Solutions (FRS) segment encompasses markets like Automotive, Health Solutions, and Industrial. The company leverages its expertise and global reach to impact the world positively.
Jumping on the ESG bandwagon, Flex Ltd. (NASDAQ:FLEX) maintains a strategy aligned with industry standards, regulatory compliance, and best practices. With Plan, Do, Check, and Act at its core, the Flex global sustainability program office is ensuring that the ESG management system recognizes improvement areas and takes corrective measures. The company has employed a ‘green’ on-site sustainability team that is in charge of the development and administration of site-specific plans. Within the Flex Power Modules, a scorecard technique is used to review the performance, highlighting issues and sharing ideas with the sustainability leaders.
Similar to its peers, the company has set bold goals for the year. Reducing water withdrawal, minimizing emissions, achieving zero waste, encouraging volunteering activities, and increasing diversity are some targets Flex Ltd. (NASDAQ:FLEX) has set for the year. Each of its sites is engaged in a local community program in one way or the other. For instance, the Penang, Malaysia team participated in a turtle conservation program, planting trees, and clearing up beaches to protect marine life. Additionally, the company has a “Giving Week” annually, during which the global workforce engages in volunteering initiatives.
In 2021, the company set up the Flex Foundation that continues to invest in programs associated with the Sustainable Development Goals by the United Nations. From good health and well-being to responsible consumption and production, the foundation takes climate action for a more sustainable tomorrow. These investments support community building, environmental conservation, global public health, and educational programs for disadvantaged groups. When it comes to making a difference, Flex Ltd. (NASDAQ:FLEX) is definitely the one and is one of the best cheap stocks to buy.
Overall FLEX ranks 11th on our list of cheap ESG stocks to buy according to hedge funds. While we acknowledge the potential of FLEX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than FLEX but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
