MORGAN STANLEY: These are the 15 best stocks for the next 12 months

With the year halfway through, Morgan Stanley analysts have compiled their “Vintage Values” report collecting their 15 best stock bets for the next year.

“Put simply, these 15 ideas represent our analysts’ highest-conviction stock ideas for outperformance over the next 12 months,” the analysts said. “We sought ideas that offer the best combination of differentiated research, favourable risk-reward profiles, and clear catalysts.”

The picks consist of companies with market caps over $US1 billion.

“We focused on anticipated events over the next year that our analysts expect will validate their investment theses, change investor perceptions, and drive the stock to our analysts’ Base (or Bull) case valuation scenario,” they added.

Last year’s “Vintage Values” outperformed the S&P 500 by 3.56%.

We’ve listed the 15 stocks below with select clips from the massive 60-page report.

Ameriprise Financial

Ticker: AMP

Primary Sector: Financials

Share Price as of July 10: $US123.68

Price Target: $US151

Dividend Yield 2015: 2.1%

Analyst Comment: 'Ameriprise is one of the best longer term fundamental stories in the industry due to superior capital management prospects and opportunities to further expand margins in the AWM division.'

Apple, Inc.

Ticker: AAPL

Primary Sector: Technology

Share Price as of July 10: $US123.28

Price Target: $US166

Dividend Yield 2015: 1.6%

Analyst Comment: 'Apple has the world's most valuable technology platform, and we believe it is best positioned to capture more of its users' time in areas such as health, cars, and home, as these platforms expand in the Internet of Things computing era.'

Bank of America

Ticker: BAC

Primary Sector: Financials

Share Price as of July 10: $US16.70

Price Target: $US20

Dividend Yield 2015: 1.2%

Analyst Comment: ' We expect 3 key catalysts to drive the stock over the next 12-18 months: 1) Lower expenses; 2) Wealth Management valuation; 3) Rising rates.'

Comcast Corporation

Ticker: CMCSA

Primary Sector: Media

Share Price as of July 10: $US63.19

Price Target: $US67

Dividend Yield 2015: 1.6%

Analyst Comment: 'Comcast cable has upside potential to estimates, in our view, from resuming more normal pricing activity after a light 2014; leveraging its X1 platform in 2016 and beyond; and exiting a content cost bubble in 2017.'

Crown Castle

Ticker: CCI

Primary Sector: Telecom Services

Share Price as of July 10: $US81.34

Price Target: $US94

Dividend Yield 2015: 4.0%

Analyst Comment: 'We favour the fundamentals of the tower model -- long term contracts, operating leverage, rate escalators, low capital expenditures, high margins, strong credit tenants, and high barriers to entry.'

Estee Lauder

Ticker: EL

Primary Sector: Consumer Staples

Share Price as of July 10: $US87.42

Price Target: $US98

Dividend Yield 2015: 1.1%

Analyst Comment: 'Our forecast is driven by EL's: (1) attractive product category growth in beauty; and (2) market share gains in the overall beauty segment, with strong EL growth particularly from expansion in emerging markets and high growth in the travel retail and eCommerce channels.'

Hilton Worldwide

Ticker: HLT

Primary Sector: Consumer Discretionary/Industrials

Share Price as of July 10: $US27.89

Price Target: $US34

Dividend Yield 2015: 0%

Analyst Comment: 'Leading unit growth (6-7% M+F) and solid US-focused revenue per available room (RevPAR) growth (~6%) driven by improving macro and attractive supply/demand dynamics should drive stable earnings growth (EBITDA growth over 10%) in the medium term.'

Ingersoll Rand

Ticker: IR

Primary Sector: Consumer Discretionary/Industrials

Share Price as of July 10: $US66.41

Price Target: $US80

Dividend Yield 2015: 1.7%

Analyst Comment: 'We see above-average growth potential in US Construction markets, to which IR is overindexed. We are seeing genuine signs of momentum in US Commercial construction.'

LinkedIn Corp.

Ticker: LNKD

Primary Sector: Technology

Share Price as of July 10: $US209.95

Price Target: $US280

Dividend Yield 2015: N/A

Analyst Comment: 'We see LinkedIn's platform monetisation continuing to improve, leading to faster than-expected top-line growth and margin expansion.'

Magna International

Ticker: MGA

Primary Sector: Consumer Discretionary/Industrials

Share Price as of July 10: $US55.32

Price Target: $US76

Dividend Yield 2015: 2.4%

Analyst Comment: 'Magna-Steyr is in a unique position to help Apple, Google, Uber or others who may want to 'make' their own cars by playing a similar role to what Foxconn does today for Apple in the smartphone industry.'

Marathon Oil

Ticker: MRO

Primary Sector: Energy/Utilities

Share Price as of July 10: $US24.46

Price Target: $US37

Dividend Yield 2015: 3.4%

Analyst Comment: 'MRO has continued to improve its drilling backlog and economics across its three core plays (Eagle Ford, Bakken, and Oklahoma) through enhanced completions, downspacing, and cost efficiencies.'

McKesson

Ticker: MCK

Primary Sector: Healthcare

Share Price as of July 10: $US229.56

Price Target: $US294

Dividend Yield 2015: 0.4%

Analyst Comment: 'McKesson is the largest global drug wholesaler with ~ 30% share of the US drug distribution market and a presence in Europe following the acquisition of Celesio.'

Oaktree Financial Group

Howard Marks

Ticker: OAK

Primary Sector: Financials

Share Price as of July 10: $US52.31

Price Target: $US67

Dividend Yield 2015: 6.0%

Analyst Comment: 'Robust cash earnings growth in part due to OAK's later cycle skew (due to European waterfall structure of funds), strong AUM growth from new fund launches, and ramping distribution of their existing products/strategies.'

Thermo Fisher Scientific

Ticker: TMO

Primary Sector: Healthcare

Share Price as of July 10: $US130.63

Price Target: $US162

Dividend Yield 2015: 0.5%

Analyst Comment: 'We view our forecast for organic growth of 4%+ in 2015 as conservative given improvements in non-industrial China and US research markets, areas of outsized relative exposure for Thermo, in contrast with conservative guidance which embeds no underlying improvements.'

Visa Inc.

Ticker: V

Primary Sector: Technology

Share Price as of July 10: $US68.42

Price Target: $US77

Dividend Yield 2015: 0.7%

Analyst Comment: 'We remain positive on longer term fundamentals and expect V to be a key beneficiary of the secular shift from cash and checks to electronic payments, with a highly defendable market position.'

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