Why Ibstock shares may be a great long-term investment
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After a tough 2020 for Ibstock (LSE:IBST) shareholders, due to the damage done to the construction industry by Covid-19, we are now witnessing not just a return but a potential boom for Ibstock shares in 2021, as the UK slowly recovers.
As an overview, the Ibstock share price has increased 14% in the last 12 months and 5.5% since the start of the year. I see the subtle increase of this price as an indication for the re-emergence and a future boom in Ibstock shares.
This stock remains in this Fool’s long-term portfolio because of two main factors. One is the UK’s recovery from the worst effects of Covid-19, and the second is Ibstock’s decision to seize on the exciting opportunities and trends in the ESG market, as demonstrated in its 2019 sustainability report.
The future and rise of ESG
Whilst the future of energy is to be set on renewable energy sources, Ibstock’s commitment to 100% pure green electricity is excellent news for shareholders of the UK’s number one brick manufacturer.
In 2020, ESG stocks flourished during a period of great uncertainty as the worst effects of Covid-19 were realised – cash inflows into the ESG market as of November 2020 nearly reached $47 billion.
This momentum has continued into 2021 as the statistics indicate that ESG companies are investing the funds effectively. Trustnet data shows that ESG and sustainable companies are outperforming traditional stocks.
So where does this leave Ibstock shareholders?
As ESG stocks continue their bull run in 2021, companies that have integrated renewable energy solutions into their business models are sure to reap the rewards of ESG’s longevity.
According to its 2019 sustainability report, Ibstock’s environmentally conscious goals for 2025 include:
- A 15% reduction in CO2 per tonne of production
- 40% reduction in preventable plastic packaging
- 5% reduction in mains water use per tonne of production
- Zero waste to landfill
On top of these numbers, Ibstock has also achieved the incredible feat of developing the world’s first net-zero brick factory.
Ibstock’s socially responsible approach is the reason why the brick manufacturer should be set to thrive in a world that is investing in a more sustainable future.
Looking to the long term
In 2021, several G7 nations, including the UK, have agreed to a programme that will lead to net-zero targets in 2030. One of these initiatives propose an end to government support for new thermal coal generation capacity without CCS technologies.
This means that in the next 10 years, renewable energy will have to replace the production of these old traditional energy sources. This demand for change is putting a lot of pressure on FTSE-100 companies. However, with Ibstock already proposing and acting upon its net-zero roadmap, the future looks very bright for the sustainably focused brick manufacturer.
I believe that investing in this stock before the catalytic effects of ESG investing are wholly realised in the next decade could lead to great returns for me.
John Town owns shares in Ibstock. The Motley Fool UK has recommended Ibstock. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.