Halal Stock List 2024
- Nvidia (NVDA)
- AMD (AMD)
- Adobe (ADBE)
- Johnson & Johnson (JNJ)
- Nike (NKE)
- Peloton Interactive (PTON)
- Lululemon (LULU)
- Visa (V)
- Tractor Supply Company (TSCO)
- Abbott Labs (ABT)
- The TJX Companies (TJX)
Sharia-compliant stocks are stocks that follow the requirements of Shariah law and the principles of Islam. They are often recognized as a type of socially responsible investing.
Ethical and responsible investing is a topic that is becoming increasingly popular among investors as they consider their values and beliefs when making investment decisions. Globally, many investors are choosing to support companies that take environmental, social, and ethical factors into account, as well as those that promote corporate governance and shareholder advocacy.
In recent years, a growing number of investors have sought out Shariah-compliant investments. According to LSEG’s Islamic Finance Development Report 2021, Islamic financial assets were valued at $3.95 billion at the end of 2021, up from $2.96 billion in 2019 and $2.2 billion in 2015. Moreover, Islamic exchange-traded funds (ETFs) overall had a record year in 2021, with more than 900 new launches worldwide and over $1 trillion in global net inflows, bringing assets under management to $9.9 trillion at the end of November (Dr. Chris Mellor, head of EMEA ETF Equity and Commodity Product Management).
Shariah-compliant investing not only appeals to Muslims but also provides socially responsible opportunities for people of other faiths. The main objective of Shariah-compliant investments is to provide an avenue for investors who wish to invest in a way that complies with Islamic law, governed in accordance with Sharia principles under the guidelines of the Sharia standard setting body, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
But what does that mean, exactly? Keep reading as we break down what Shariah-compliant investing is all about.
How to invest in US stocks in the UAE
What Is Sharia Compliance?
Sharia-compliant stocks are stocks that follow Islamic law.
A Shariah-compliant investment should not involve any of the activities prohibited by Islam, such as usury (Riba), gambling (Maisir), or ambiguity (Gharar). This includes investments in companies or sectors that are engaged in Shariah non-compliant activities, such as:
- Institutions that deal with interest and excess debt
- Alcohol
- Pork-related products and non-halal food production, packaging and processing or connected activity
- Gambling
- Adult entertainment
- Tobacco
- Marijuana
- Cloning
- Firearms and defense
What Makes a Stock Halal?
Islamic scholars have established a screening process similar to "negatively screened" ethical funds using ESG criteria to determine whether a business activity abides by Shariah principles. Along with the screening process, a Sharia-compliant fund will include an advisory board made up of Islamic scholars who decide or check which companies meet the rules set out by AAOIFI. Each fund’s policies may differ as it is run in accordance with the Shariah Board's beliefs and interpretations. Investors should consult the fund's prospectus before investing.
The screening process involves the following stages:
Business activity screening
A business's activity must be in accordance with Shariah principles; therefore, any companies involved in the below activities are screened out:
- Institutions that deal with interest and excess debt (non-Islamic banking, finance, and insurance, etc.)
- Alcohol
- Pork-related products and non-halal food production, packaging and processing or connected activity
- Gambling
- Adult entertainment
- Tobacco
- Marijuana
- Cloning
- Firearms, weapons, and defense
You can instantly rule out any businesses in these industries as they are engaged in Sharia-non-compliant activities. However, you can also dig deeper into how the company operates and if its practices are fair and ethical.
The most common mistake investors make is to invest in companies with interest-based income or companies that are lending at interest, as the generated income comes from Shariah-non-compliant investments.
If this applies to a stock that you are considering, there's a simple way to see whether the investment is still viable. The rule of thumb is that the revenue from these investments cannot exceed 5% of the gross revenue of the company. Investors should check income for Sharia-non-compliant investments and gross revenue from annual reports to verify this. You'll also want to compare this figure to the company's gross revenue. If it exceeds 5%, there are two generally permissible conditions.
The investor should first determine the amount of haram income received and offset it by giving away the same percentage of his profits to charity. Second, they should publicize their opposition to these haram activities in some manner.
Financial Ratio Screening
Once the companies with non-compliant business activities have been screened out, they are further reviewed using accounting ratios.
The second factor for a stock to be considered halal relates to the percentage of interest-bearing debt in relation to total assets. Interest-bearing debt must not exceed 33% of total assets. This benchmark is not specific to halal investments, non-muslim investors also use similar rules as it’s a comfortable level of risk.
A company would be acceptable for Sharia-compliant investments if it meets the following criteria:
- Interest-bearing securities and assets must be less than 30% of trailing 36-month average market capitalization
- Interest-bearing debt must be less than 30% of trailing 36-month average market capitalization
If it exceeds the percentage allowed, the company or investment will be considered Shariah non-compliant.
Top 12 Halal Stocks List
Below is a list of some of the most traded halal stocks on the baraka app.
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Nvidia (NVDA)
Nvidia Corporation focuses on personal computer (PC) graphics, graphics processing unit (GPU) and also on artificial intelligence (AI).
Market Cap: $1.39T
Performance (YTD): 17.05%
Sharia Score: 5
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AMD (AMD)
Advanced Micro Devices, Inc. is a global semiconductor company.
Market Cap: $236.8B
Performance (YTD): 14.55%
Sharia Score: 4
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Adobe (ADB)
Adobe Inc., formerly Adobe Systems Incorporated, is a software company. The Company offers products and services used by professionals, marketers, knowledge workers, application developers, enterprises and consumers for creating, managing, measuring, optimizing and engaging with compelling content and experiences.
Market Cap: $271.6B
Performance (YTD): 5.86%
Sharia Score: 5
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Johnson & Johnson (JNJ)
Johnson & Johnson is a holding company, which is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. It operates through three segments: Consumer, Pharmaceutical and Medical Devices.
Market Cap: $390.9B
Performance (YTD): -0.38%
Sharia Score: 3
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Nike (NKE)
NIKE, Inc. is engaged in the design, development, marketing and selling of athletic footwear, apparel, equipment, accessories and services.
Market Cap: $127.9B
Performance (YTD): -0.35%
Sharia Score: 5
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Peloton Interactive (PTON)
Peloton Interactive, Inc. is a provider of interactive fitness platforms. The company provides connected, technology-enabled fitness, and the streaming of immersive, instructor-led boutique classes to its customers.
Market Cap: $2.0B
Performance (YTD): -13.54%
Sharia Score: 4
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Lululemon (LULU)
Lululemon Athletica Inc. is a designer, distributor, and retailer of lifestyle-inspired athletic apparel and accessories.
Market Cap: $58.1B
Performance (YTD): -4.15%
Sharia Score: 5
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Visa (V)
Visa Inc. is an American multinational payment card services corporation headquartered in San Francisco, California. It facilitates electronic funds transfers throughout the world, most commonly through Visa-branded credit cards, debit cards and prepaid cards. Visa is one of the world's most valuable companies.
Market Cap: $418.1B
Performance (YTD): 2.14%
Sharia Score: 4
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Tractor Supply Company (TSCO)
Tractor Supply Company, founded in 1938, is an American retail chain of stores that sells products for home improvement, agriculture, lawn and garden maintenance, livestock, equine and pet care for recreational farmers and ranchers, pet owners, and landowners.Market Cap: $24.2B
Performance (YTD): 2.45%
Sharia Score: 5
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Abbott Labs (ABT)
Abbott Laboratories is an American multinational medical devices and health care company with headquarters in Abbott Park, Illinois, United States. The company was founded by Chicago physician Wallace Calvin Abbott in 1888 to formulate known drugs; today, it sells medical devices, diagnostics,
Market Cap: $197.8B
Performance (YTD): 2.67%
Sharia Score: 3
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The TJX Companies (TJX)
The TJX Companies, Inc. (TJX) is an off-price apparel and home fashion retailer in the United States and across the world.
Market Cap: $94.185B
Performance (52-Week Change): 9.84%
Sharia Score: 5
(As of 9th Jan 2023)
How to Buy Halal Stocks with baraka?
At baraka we offer users the chance to Halalify their portfolios through our Sharia filter, allowing them to invest in stocks and ETFs without compromising their personal beliefs.
baraka provides access to traditional securities and does not intend to engage a Shariah advisor or obtain a fatwa regarding Sharia-screened securities listed on the app. Baraka does not have an Islamic Window endorsement from the DFSA. Clients should be aware that Sharia-screened stocks may involve additional risks and costs. There can be no assurance as to the Sharia compliance of the securities listed by Baraka Financial Limited. Clients are reminded that views on Sharia compliance may also differ. If you do not understand such risks or costs or are unsure whether the securities offered by Baraka Financial Limited are in compliance with the principles of Sharia, you should consult a Sharia advisor.
Past performance is no guarantee of future results. Your investment can fluctuate, so you may get back less than you invested. Consider each product’s risk(s) before investing. Baraka is not a financial adviser and therefore does not provide financial advice. Our content is informational only.
