Morgan Stanley analysts have identified their top picks for global stocks in this choppy market. They believe that they all look very cheap at the moment. While Morgan Stanley — like other banks — remains cautious on stocks, given persistently high inflation, slowing global growth and the Ukraine war, it identified several “key overweights” in a note dated May 11. “Let’s keep it simple — the macro backdrop is very difficult for stocks. “Our European economists are revising down their GDP projections, increasing their inflation estimates, and bringing forward ECB’s first hike until July”, Graham Secker’s analysts stated. This refers to the possibility of the European Central Bank raising its interest rates. They also noted that European bond yields and spreads are “biased higher” while geopolitical risk remains elevated. The note included its European Mid-year Outlook. Morgan Stanley prefers European stocks that offer the best Risk-Reward ratio. All of the bank’s top choices have a minimum market capital of $5 billion and an upside at least 10% to their base price target. The bank also lists the following EU stocks as “cheap” relative to their global counterparts. Stellantis, an automaker, has a 41% upside potential to its base price target. LVMH, a luxury group, offers 49% upside potential. EssilorLuxottica was chosen as its eyewear business, which has a potential 26% upside on the bank’s base case price target. Orsted (36%), Holcim (21%), and Holcim (21%) were also included. High conviction calls Morgan Stanley’s analysts also made multiple “high conviction” recommendations, including staying overweight value versus growth stocks — value stocks are seen to be trading at a discount, while investors expect growth stocks to post strong earnings growth. It also recommends that overweight stocks be maintained with “high conviction”. [and]”Secure dividend yield” is offered by insurance company Allianz, British Land real estate and Vodafone telecoms. The analysts said that they recommend investors look for stocks that have attractive dividend yields. We consider this a short-term strategy when rising interest rates are being considered. The bank is a fan of the FTSE 100 index when it comes down to indexes. “Despite strong relative performance [year to date]Analysts noted that the index remains one of the most affordable asset classes. Despite falling indices, the FTSE 100 saw gains of 0.38% during April. The S & P 500 slid 8.8% over the month, for instance, and the MSCI World index fell over 7%.
The screen below displays information about Morgan Stanley’s trading on the New York Stock Exchange (NYSE) floor. It was viewed January 19, 2022.
Brendan McDermid | Reuters
Morgan StanleyAnalysts named the top stocks they believe to be in the global market, stating that none of them are expensive right now.
