The theme of diversity, equity and inclusion has resonated throughout society over the past two years, including in the financial arena.
“Several diversity, equity, and inclusion demographic factors already impact the global economy, related to race, gender, disabilities and more,” Bank of America analysts wrote in a commentary.
“Cultural and institutional bottlenecks and gaps exist within these societal groups. Unlocking them could yield considerable economic benefits and mitigate some of the challenges related to an aging, [shrinking] workforce.”
The gender pay gap was worsening before the covid pandemic: It would take 267 years to reach economic equality on the current trajectory, the analysts said.
“Closing [the gap] could deliver up to $28 trillion additional GDP by 2025,” they said. “Furthermore, closing the racial earnings gap resulting from disparities in health, education, incarceration and employment opportunities would boost trend growth by 0.5 percentage point per year through 2050.”
Generation Z, the largest and most diverse generation, will drive the diversity, equity and inclusion movement, the analysts said. Gen Z includes those born between about 1997 and 2012.
And “22% of Gen Z has at least one immigrant parent compared with 15% of Millennials [born 1981-1996] in 2002,” the analysts said, citing Pew Research.
They cited four stocks that can benefit from the diversity, equity and inclusion theme.
· Hologic (HOLX), which Bank of America calls a leading maker of medical devices for women.
· Organon (OGN), a pharmaceutical company that includes products for women.
· Victoria’s Secret (VSCO), the women’s apparel and beauty-care retailer.
· Torrid (CURV), an apparel retailer for plus-size women.
Bank of America’s Take on the Stocks
Hologic: “As the U.S. market leader in digital mammography systems, Hologic helps ensure better breast health,” the analysts said. “Hologic's skeletal health business provides … devices that help diagnose and monitor osteoporosis. Within diagnostics, the company has a top position in … products used for the detection and diagnosis of cervical cancer.”
Organon: “Women's health is a core component of OGN's mission statement,” the analysts said. “Organon … has stated that the company's commitment to women's health is modality agnostic. In other words, management intends for OGN to be not only a pharmaceuticals company but include devices and diagnostics … if they are beneficial to women's health.”
Victoria’s Secret: “VSCO has undergone a brand and management team overhaul over the last two years, and is now at the forefront of diversity and inclusion in the young adult retail apparel space,” the analysts said. “While the brand has ceded share since its peak in 2015, it remains the No. 1 market-share holder in the U.S. for women's lingerie.”
Torrid: “Torrid [is] an industry disruptor in the plus-size apparel space with a … steady growth trajectory,” the analysts said. “Less than 2% of apparel retailers specialize in plus-size. Demand for plus-size offerings is increasing much more rapidly than that for general apparel, indicating ample opportunity to broaden the brand's reach within the $85 billion U.S. plus-size market.”
