“This is a company that has a tough time growing organic revenue, but there are still a couple of things that get us excited about PPG,” says Klaber. “One, it’s a wide-moat asset. They’re either No. 1 or No. 2 in each category in their industry. We think that recent changes has aligned management interest with shareholder interest.”

PPG also has strong market presence in Europe and a “pristine” balance sheet, says Klaber, making them a likely industry consolidator that will gain in market share.

Klaber says that considering a company’s chances of future growth, and ensuring that it will be a relevant player in its industry moving forward helps Parnassus avoid technological disruption and value traps.

Progressive

Parnassus also thinks that Progressive insurance will be a company that will compound over time. Because the company is diligent about making sure poor drivers pay much higher premiums, it tends to focus on lower-risk clients.

“Bad drivers constitute 80 percent of insurance claims, so we think Progressive has found a good way to make more money,” says Klaber. In addition, Progressive recently acquired a homeowner’s insurance business, American Strategic Insurance, allowing them to bundle automobile and home coverage and increase their market share. “Progressive is a stable earnings grower that could also benefit from rising rates.”

Allergan

Klaber points to Allergan as another high-quality company available at cheap multiples and with potential for future growth.  Not only does the pharmaceutical company have a strong pipeline of products in the latter stages of trials, but it also has several durable, non-prescription products in the health and beauty sector that should continue to sell well, including Botox, the cosmetic application of the botulism toxin.

A Place For Wells Fargo And Google, Too

Not all of the fund’s holdings carry similar value and growth narratives. For example, Parnassus continues to hold a sizable stake in Wells Fargo, even after a 2016 false-account scandal soured many socially responsible investors on the company. At Financial Advisor’s recent Inside Alternatives 2017 conference,  Benjamin Allen, the fund company’s president, explained the decision to keep Wells Fargo as one of impact, arguing that Parnassus would use its clout to hold Wells Fargo accountable for changes.