5 Cheap Stocks Leading the Low-Carbon Transition

Investors seeking companies committed to the low-carbon transition may find Kraft CNH IndustrialCampbell’s, Lululemon, and Biogen worth exploring. In this article, we look at companies that have displayed a commitment to reducing their carbon intensity while also reporting their carbon transmissions and overall contributing positively to the environment.

Morningstar US Low Carbon Transition Leaders Index

We found these companies by scouring the holdings in the Morningstar US Low Carbon Transition Leaders Index. The index comprises 192 equity holdings, with 48% in the 10 largest stocks. Nvidiacommands the highest portfolio weight at nearly 11.37%, followed by industry giants like Apple, Tesla, and Alphabet

The index, launched on Feb. 28, 2024, is designed to offer diversified exposure to companies leading the charge in carbon reduction. The companies are ranked according to their carbon intensity and Low-Carbon Transition Ratings from Morningstar Sustainalytics. The index also seeks to emphasize companies that report carbon emissions and are reducing their carbon intensity, as well as those whose business activities contribute positively to the environment.

Morningstar tracks performance from June 19, 2020. So far in 2025, the Morningstar US Low Carbon Transition Leaders Index has returned 12.61% versus SPDR S&P 500 ETF Trust’sreturn of 11.13%. In 2024, the index returned 31.21% versus SPY’s 24.87% gain.

We looked for companies within this index with the lowest price/fair value estimates, as of Sept. 8, 2025

1. Kraft Heinz KHC
2. CNH Industrial CNH
3. Campbell’s CPB
4. Lululemon LULU
5. Biogen BIIB

Kraft Heinz

Analyst: Erin Lash, CFA

• Price/Fair Value: 0.54
• Industry: Packaged Foods

“Despite Kraft Heinz’s intentions to spin off its North American grocery brands from its global sauces, spreads, and seasonings operations, our narrow moat rating is unchanged. Our assessment is based on the strength of its intangible brand assets, which are contributing to benefits on the cost side of the ledger.”

CNH Industrial

Analyst: George Maglares

• Price/Fair Value: 0.55
• Industry: Farm & Heavy Construction Machinery

“CNH has a stable balance sheet with industrial net/debt EBITDA of approximately 1.9 times and investment-grade credit ratings. The company generates cash and pays a dividend. Management repurchases shares with surplus cash in the absence of organic or inorganic growth opportunities. The company has historically been rather acquisitive, particularly regarding precision agriculture technology, though we believe it has assembled the bulk of the capabilities it needs to round out its technology stack.”

Campbell’s

Analyst: Erin Lash, CFA

• Price/Fair Value: 0.55
• Industry: Packaged Foods

“We assign Campbell’s a wide economic moat rating. We believe the firm has amassed a durable competitive edge through its strong brands and entrenched retailer relationships, which have contributed to a cost edge. When taken together, we posit this has created meaningful barriers to successful entry into the categories in which it plays. We forecast adjusted returns on invested capital (including goodwill) migrating toward the low-teens by the end of our 10-year explicit forecast (exceeding our 7% weighted average cost of capital) and believe the firm will generate excess economic profits over the next two decades.”

Lululemon

Analyst: David Swartz

• Price/Fair Value: 0.55
• Industry: Apparel Retail

“We think Lululemon is in exceptional financial shape. Lululemon is unusual in that it developed a multi-billion-dollar apparel brand and store network without long-term debt. The firm closed July 2025 with $1.3 billion in cash and $400 million available on its revolving credit facilities.

We forecast Lululemon will generate significant free cash flow for stock buybacks. Free cash flow to the firm has averaged about $1.1 billion per year over the past four years, allowing Lululemon to repurchase nearly $3.5 billion (net) in shares in that period. We forecast it will generate about $9 billion in free cash flow to the firm over the next five years and use most of it for buybacks. The firm could easily afford to issue dividends, but it has no plans to do so.”

Biogen 

Analyst: Jay Lee

• Price/Fair Value: 0.64
• Industry: Drug Manufacturers – General

“Biogen has achieved strong profitability based on its diversified multiple sclerosis, or MS, portfolio and a long-standing Roche collaboration for CD20-based drugs in MS and oncology. However, we think the firm’s wide moat has eroded into a narrow one as branded and generic drugs are pressuring MS sales and as the launch of new Alzheimer’s disease drug Leqembi is slow to gain traction. Biogen’s emerging portfolio does appear to have intangible assets covering markets outside of MS across a range of indications in immunology, neurology, and rare diseases. Returns on invested capital, historically north of 20%, are likely to bottom out over the next couple of years due to generic pressure on Tecfidera and biosimilar pressure on Rituxan and Tysabri. However, we expect ROICs to exceed our 7.1% cost of capital estimate once again by 2026 and to rebound to the midteens in the long run.”

This story was originally published on April 17, 2024, and has been updated.