Morgan Stanley: These New 'Nifty 50' Stocks Could Crush The Market For Years To Come

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In a note out this morning, Morgan Stanley’s European Strategy team argues that we’re on the verge of seeing a new “Nifty 50” — a group of large cap stocks that outperform markets despite a slowdown in Europe.From 1964 to 1972, a bundle of 50 “Nifty” stocks like Procter & Gamble, IBM, Walt Disney, McDonald’s, General Electric, and Polaroid outperformed the S&P by 189%, even though that market moved generally sideways in a difficult macro environment.

With troubling signs from the eurozone and the U.S. and expectations that 80% of global GDP will come from emerging markets in 2012, Morgan Stanley analysts argue that we should be looking for a new lucky bundle once again.

Three components stand out, they say: Stocks with high exposure to emerging markets (specifically, at least 40% of revenues from EM and 17.5% from Brazil, India, and China), stocks with accelerating revenue growth, and reliable stocks with solid earnings and revenue growth.

Morgan Stanley’s analysts expect this first, high EM exposure category to see several big winners — even if they’ve underperformed MSCI Europe overall in 2011.

#1 Essar Energy (ESSR)

Industry: Energy

Market Cap: $5,675 million

EM Exposure: 100%

Exposure to Brazil: 0%

Exposure to India: 0%

Exposure to China: 100%

Source: Morgan Stanley

#2 Aixtron

Industry: Semiconductors & Semiconductor Equipment

Market Cap: $1,541 million

EM Exposure: 91%

Exposure to Brazil: 0%

Exposure to India: 25%

Exposure to China: 0%

Source: Morgan Stanley

#3 SBM Offshore

Industry: Energy

Market Cap: $3,479 million

EM Exposure: 89%

Exposure to Brazil: 45%

Exposure to India: 0%

Exposure to China: 0%

Source: Morgan Stanley

#4 Lenzing AG

Industry: Materials

Market Cap: $2,669

EM Exposure: 75%

Exposure to Brazil: 3%

Exposure to India: 19%

Exposure to China: 4%

Source: Morgan Stanley

#5 CSR PLC

Industry: Semiconductors & Semiconductor Equipment

Market Cap: $498 million

EM Exposure: 73%

Exposure to Brazil: 0%

Exposure to India: 50%

Exposure to China: 0%

Source: Morgan Stanley

#6 Nokia

Industry: Technology Hardware & Equipment

Market Cap: $24,024 million

EM Exposure: 68%

Exposure to Brazil: 3%

Exposure to India: 18%

Exposure to China: 4%

Source: Morgan Stanley

#7 MAN

Industry: Capital Goods

Market Cap: $12,104 million

EM Exposure: 67%

Exposure to Brazil: 40%

Exposure to India: 0%

Exposure to China: 0%

Source: Morgan Stanley

#8 Ericsson

Industry: Technology Hardware & Equipment

Market Cap: $34,031 million

EM Exposure: 66%

Exposure to Brazil: 0%

Exposure to India: 13%

Exposure to China: 7%

Source: Morgan Stanley

#9 Outotec Plc

Industry: Capital Goods

Market Cap: $1,891 million

EM Exposure: 65%

Exposure to Brazil: 15%

Exposure to India: 6%

Exposure to China: 5%

Source: Morgan Stanley

#10 STMicroelectronics NV

Industry: Semiconductors & Semiconductor Equipment

Market Cap: $6,411 million

EM Exposure: 63%

Exposure to Brazil: 0%

Exposure to India: 25%

Exposure to China: 0%

Source: Morgan Stanley

#11 Aveva Group Plc

Industry: Software & Services

Market Cap: $1,488 million

EM Exposure: 63%

Exposure to Brazil: 5%

Exposure to India: 11%

Exposure to China: 2%

Source: Morgan Stanley

#12 DSM

Industry: Materials

Market Cap: $9,260 million

EM Exposure: 59%

Exposure to Brazil: 5%

Exposure to India: 15%

Exposure to China: 4%

Source: Morgan Stanley

#13 Casino

Industry: Food & Staples Retailing

Market Cap: $9,351

EM Exposure: 59%

Exposure to Brazil: 43%

Exposure to India: 0%

Exposure to China: 0%

Source: Morgan Stanley

#14 CGG Veritas

Industry: Energy

Market Cap: $3,345 million

EM Exposure: 58%

Exposure to Brazil: 11%

Exposure to India: 15%

Exposure to China: 0%

Source: Morgan Stanley

#15 Unilever PLC

Industry: Food Beverage & Tobacco

Market Cap: $92,296 million

EM Exposure: 56%

Exposure to Brazil: 8%

Exposure to India: 3%

Exposure to China: 8%

Source: Morgan Stanley

#16 Swatch

Industry: Consumer Durables & Apparel

Market Cap: $22,175 million

EM Exposure: 56%

Exposure to Brazil: 0%

Exposure to India: 30%

Exposure to China: 0%

Source: Morgan Stanley

#17 Ageas

Industry: Insurance

Market Cap: $4,989 million

EM Exposure: 56%

Exposure to Brazil: 0%

Exposure to India: 21%

Exposure to China: 1%

Source: Morgan Stanley

#18 Rotork PLC

Industry: Capital Goods

Market Cap: $2,208

EM Exposure: 55%

Exposure to Brazil: 2%

Exposure to India: 14%

Exposure to China: 8%

Source: Morgan Stanley

#19 Atlas Copco

Industry: Capital Goods

Market Cap: $24,657 million

EM Exposure: 54%

Exposure to Brazil: 6%

Exposure to India: 11%

Exposure to China: 4%

Source: Morgan Stanley

#20 Pirelli & C. SpA

Industry: Automobiles & Components

Market Cap: $4,066 million

EM Exposure: 54%

Exposure to Brazil: 21%

Exposure to India: 5%

Exposure to China: 0%

Source: Morgan Stanley

#21 Vallourec

Industry: Capital Goods

Market Cap: $7,701 million

EM Exposure: 53%

Exposure to Brazil: 24%

Exposure to India: 8%

Exposure to China: 0%

Source: Morgan Stanley

#22 Volkswagen

Industry: Automobiles & Components

Market Cap: $65,082 million

EM Exposure: 52%

Exposure to Brazil: 7%

Exposure to India: 23%

Exposure to China: 0%

Source: Morgan Stanley

#23 Richemont SA

Industry: Consumer Durables & Apparel

Market Cap: $29,287 million

EM Exposure: 52%

Exposure to Brazil: 0%

Exposure to India: 25%

Exposure to China: 0%

Source: Morgan Stanley

#24 Banco Santander

Industry: Banks

Market Cap: $74,698 million

EM Exposure: 52%

Exposure to Brazil: 35%

Exposure to India: 0%

Exposure to China: 0%

Source: Morgan Stanley

#25 Metso

Industry: Capital Goods

Market Cap: $5,260 million

EM Exposure: 52%

Exposure to Brazil: 8%

Exposure to India: 16%

Exposure to China: 3%

Source: Morgan Stanley

#26 Syngenta

Industry: Materials

Market Cap: $19,583 million

EM Exposure: 51%

Exposure to Brazil: 16%

Exposure to India: 16%

Exposure to China: 0%

Source: Morgan Stanley

#27 LVMH Moet Hennessy Louis Vuitton SA

Industry: Consumer Durables & Apparel

Market Cap: $78,362 million

EM Exposure: 51%

Exposure to Brazil: 2%

Exposure to India: 20%

Exposure to China: 1%

Source: Morgan Stanley

#28 Clariant

Industry: Materials

Market Cap: $3,227 million

EM Exposure: 51%

Exposure to Brazil: 8%

Exposure to India: 7%

Exposure to China: 3%

Source: Morgan Stanley

#29 International Power

Industry: Utilities

Market Cap: $26,170 million

EM Exposure: 50%

Exposure to Brazil: 27%

Exposure to India: 0%

Exposure to China: 0%

Source: Morgan Stanley

#30 Holcim

Industry: Materials

Market Cap: $19,583 million

EM Exposure: 49%

Exposure to Brazil: 1%

Exposure to India: 0%

Exposure to China: 18%

Source: Morgan Stanley

#31 Invensys

Industry: Capital Goods

Market Cap: $2,798 million

EM Exposure: 48%

Exposure to Brazil: 3%

Exposure to India: 11%

Exposure to China: 5%

Source: Morgan Stanley

#32 Anheuser-Busch InBev

Industry: Food Beverage & Tobacco

Market Cap: $87,010 million

EM Exposure: 48%

Exposure to Brazil: 26%

Exposure to India: 5%

Exposure to China: 0%

Source: Morgan Stanley

#33 Alfa Laval AB

Industry: Capital Goods

Market Cap: $7,328 million

EM Exposure: 47%

Exposure to Brazil: 3%

Exposure to India: 13%

Exposure to China: 9%

Source: Morgan Stanley

#34 Scania AB

Industry: Capital Goods

Market Cap: $12,899 million

EM Exposure: 47%

Exposure to Brazil: 23%

Exposure to India: 3%

Exposure to China: 0%

Source: Morgan Stanley

#35 Bureau Veritas S.A.

Industry: Commercial & Professional Services

Market Cap: $8,118 million

EM Exposure: 47%

Exposure to Brazil: 0%

Exposure to India: 19%

Exposure to China: 0%

Source: Morgan Stanley

#36 Telefonica

Industry: Telecommunication Services

Market Cap: $96,336 million

EM Exposure: 46%

Exposure to Brazil: 24%

Exposure to India: 0%

Exposure to China: 0%

Source: Morgan Stanley

#37 Edenred

Industry: Commercial & Professional Services

Market Cap: $5,879 million

EM Exposure: 45%

Exposure to Brazil: 31%

Exposure to India: 0%

Exposure to China: 0%

Source: Morgan Stanley

#38 ABB

Industry: Capital Goods

Market Cap: $44,733 million

EM Exposure: 45%

Exposure to Brazil: 2%

Exposure to India: 10%

Exposure to China: 7%

Source: Morgan Stanley

#39 Intertek Group plc

Industry: Commercial & Professional Services

Market Cap: $4,903 million

EM Exposure: 43%

Exposure to Brazil: 0%

Exposure to India: 21%

Exposure to China: 0%

Source: Morgan Stanley

#40 Yara ASA

Industry: Materials

Market Cap: $12,688 million

EM Exposure: 43%

Exposure to Brazil: 14%

Exposure to India: 8%

Exposure to China: 4%

Source: Morgan Stanley

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