Socially Responsible Investors: Take a Look at This Beaten-Up, Environmentally Friendly Company

With its focus on environmentally friendly product alternatives, EcoSynthetix Inc. (TSX:ECO) is financially sound with a growing business and product lines.

| More on:

The world is trying to move away from fossil fuels. While this effort may be to the chagrin of oil producers, there is no doubt that there remains a concerted effort to make all industries greener and more environmentally friendly. To meet this need, companies have sprung up that offer green solutions to areas traditionally served by the fossil fuel industry.

One such company is EcoSynthetix Inc. (TSX:ECO). Ecosynthetix is involved in finding environmentally friendly alternatives for the paper, construction materials, labels, personal care, and coatings industry. Their products range from glossy paper coatings to the fixing agent in hair gels.

Now, the company does not pay a dividend, but this is not a negative investors should concern themselves with at this stage. Since it is still in the growth phase of its development as a company, this may help it to allocate capital for more efficient purposes, such as product development. Also, not having a dividend decreases the need for growing companies to rely on debt. Finally, growing companies without dividends can be more tax efficient for investors since they are not taxed until sold.

The company is growing. In the most recent quarter, sales increased 22% year over year. Gross profit also increased by 14%. That being said, the company reported a net earnings loss in the quarter, but the loss has decreased when compared to the previous year. Since the company is still growing and investing in its business, the loss can be justified for the time being. That being said, an investor should keep a close eye on the coming financial reports to see if there is continued progress being made towards profitability.

The company has an excellent balance sheet, with a significant amount of cash and no debt. It is always a good sign to see a company is remaining debt free. Another positive point in favour of the company is the fact that its share count has remained relatively stable. In fact, the company was able to use some of its cash to purchase shares to offset options that were exercised by employees to keep share stability.

There is no doubt that EcoSynthetix is a higher-risk investment. The company is growing, but it is competing against established products that work well. With their main selling point being that their products are more environmentally friendly than their fossil fuel competitors, EcoSynthetix either has to rely on its customers’ desire to be more environmentally friendly in their products or have cheaper prices than their competitors.

But EcoSynthetix seems to be making headway in its sales, and its prices were noted to be comparable to existing products. An investor who wants to invest in environmental alternatives to existing products may find EcoSynthetix to be an interesting opportunity. Since it does not yet have any earnings, it can be difficult to value. As a result, this company remains highly speculative, and an investor would be well advised to make only a small investment in it.

Should you invest $1,000 in Ecosynthetix Inc. right now?

Before you buy stock in Ecosynthetix Inc., consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Ecosynthetix Inc. wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Kris Knutson has no position in any of the stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Tech Stocks

Tech Stocks

The Smartest Tech Stock to Buy With $4,000 Right Now

Down almost 50% from all-time highs, this tech stock offers significant upside potential to shareholders in May 2025.

Read more »

Income and growth financial chart
Tech Stocks

2 Canadian Stocks That Could Turn $10,000 Into $100,000

If you're looking for growth and income, these two are some of the best options out there.

Read more »

money goes up and down in balance
Tech Stocks

1 Magnificent Tech Stock Down 27% to Buy and Hold Forever

Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) is starting to look severely undervalued after its latest drop!

Read more »

ways to boost income
Tech Stocks

1 Undervalued TSX Stock Down 18% to Buy and Hold

This TSX stock remains down but is due for a huge comeback for investors.

Read more »

grow money, wealth build
Tech Stocks

This TSX Stock Down 20% Could Triple Your Money by 2028

Down 20% from its 52-week high, this TSX stock is positioned to more than triple investor returns over the next…

Read more »

money goes up and down in balance
Tech Stocks

The Smartest Canadian Stock to Buy With $600 Right Now

The Canadian stock market has some big winners trading at discounted share prices, ripe for the taking, and here’s one…

Read more »

Muscles Drawn On Black board
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $4,000

Seeking strength from your investments? Then these are the three stocks to consider first.

Read more »

Investor wonders if it's safe to buy stocks now
Tech Stocks

Where Will BlackBerry Be in 4 Years?

With fresh partnerships and a tighter focus, BlackBerry is trying to lay the foundation for long-term growth.

Read more »