Morgan Stanley is out with its latest “Best Ideas” list for North America.
Apple, which reported monster quarterly earnings on Tuesday with 74.4 million iPhones sold in the fourth quarter, is one of the nine on this list.
The analysts identified stocks that required out-of-consensus analysis, offered a favourable risk-reward profile, and displayed a clear path to growth.
2015 EPS: $US3.52
2015 Price to Earnings: 88.2
Price Target: $US420
Comment: 'Near term, the recent earnings reset and related pullback in investments -- along with low institutional ownership -- provide an attractive set-up with AMZN at 52-week lows,' wrote Morgan Stanley's Katy Huberty.
2015 EPS: $US7.89
2015 Price to Earnings: 14.2
Price Target: $US126
Comment: 'Apple shares do not price in upcoming hardware, software, and services innovations, in our view,' wrote Morgan Stanley's Katy Huberty. 'We expect iPhone share gains and growth re-acceleration driven by larger-screen iPhones based on our AlphaWise surveys and supply chain checks.'
2015 EPS: $US11.15
2015 Price to Earnings: 20.3
Price Target: C$278
Comment: 'As cost cutting comes to an end, low costs / high service can accelerate rev. growth toward 10%,' Morgan Stanley's William Greene wrote. 'There are plenty of examples of low-cost, high-service transportation providers that consistently outgrow peers, and we believe CP will be another.'
2015 EPS: $US5.60
2015 Price to Earnings: 12.4
Price Target: $US90
Comment: 'Given its 50-60% revenue exposure to secular end markets, we expect the company to grow at about 2x the over-all industry,' wrote Morgan Stanley's Ravi Shanker. 'Only company in our coverage to have exposure to all secular themes -- safety, fuel efficiency, light-weighting & autonomous driving.'
2015 EPS: $US4.85
2015 Price to Earnings: 13.5
Price Target: $US70
Comment: 'We believe the market underappreciates M's continued market share gain potential, as well as the retailer's best-in-class free cash flow yield and share buyback capacity,' wrote Morgan Stanley's Kimberly Greenberger.
2015 EPS: $US4.80
2015 Price to Earnings: 14.4
Price Target: $US105
Comment: 'We see multiple growth avenues from category and geographic expansion,' wrote Morgan Stanley's Kimberly Greenberger. 'Our outlook calls for a 12% 3-year CAGR (vs. Softlines average 7%) driven by expanding revenue across geographies, categories and channels.'
2015 EPS: $US0.52
2015 Price to Earnings: 112.1
Price Target: $US80
Comment: 'CRM is one of the best secular stories in software, in our view, and has more direct participation in secular demand for mobile, social, and cloud than any name we follow,' wrote Morgan Stanley's Keith Weiss.
2015 EPS: $US2.30
2015 Price to Earnings: 7.7
Price Target: $US28
Comment: 'While STLD is a more defensive play than blast furnace mills, we see upside to our mid-cycle valuation,' wrote Morgan Stanley's Evan Kurtz. There's a 'favourable structural environment for steel (consolidation, trade barriers, logistics issues, attractive underlying demand trends).'
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