42 Stocks That Will Thrive In Any Economy

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The fast approaching fiscal cliff, the Chinese economic slowdown, Europe’s debt crisis, and various geopolitical risks around the world have made investors increasingly antsy.To help investors navigate this uncertain environment, Morgan Stanley offers a list of 42 secular growth stocks.  These are the companies that benefit from strong long-term growth prospects. 

“Our analysts have high conviction on the “secular growth” characteristics of these companies regardless of the general economic environment,” writes Morgan Stanley’s Adam Parker.

Tech stocks account for 43 per cent of the list, and retail accounts for about 21 per cent of the list. 

Note: The EPS growth is the projected compound annual growth rate (CAGR) from 2011-2014, the PE estimates are based on 2012 EPS expectations, and the PEG ratio refers to the price earnings to growth ratio which is an indicator of the stock’s valuation.

Amazon

Ticker: AMZN

EPS growth: 43.8%

PE 2012: 327.9

PEG ratio: 7.5

Amazon is the best positioned global eCommerce retailer and has a competitive advantage in pricing and customer service, according to Morgan Stanley's Scott Devitt.

Source: Morgan Stanley

American Tower

Ticker: AMT

EPS growth: 34.3%

PE 2012: 50.1

PEG ratio: 1.5

American Tower has exposure to emerging markets and is benefiting from mobile broadband growth, according to Morgan Stanley's Simon Flannery.

Source: Morgan Stanley

Apple

Ticker: AAPL

EPS growth: 34.4%

PE 2012: 15.4

PEG ratio: 0.4

Apple is the 'main beneficiary of smartphone/tablet proliferation' and stands to gain unit and profit share, according to Morgan Stanley's Katy Huberty.

Source: Morgan Stanley

Athenahealth

Ticker: ATHN

EPS growth: 22.6%

PE 2012: 93.6

PEG ratio: 4.1

'A leading share in the cloud-based Healthcare IT market, a growing product portfolio which can leverage its existing user base, and an entry into the enterprise market provide ATHN with a compelling secular growth story in Healthcare IT,' according to Morgan Stanley's Stephen Maresca.

Source: Morgan Stanley

Atlas Resource Partners

Ticker: ARP

EPS growth: 26.1%

PE 2012: NM

PEG ratio: NA

Atlas Resource Partners is position to see cash distribution growth rise over multiple years because of its natural gas opportunities and exploration and production structure, according to Morgan Stanley's Stephen Maresca.

Source: Morgan Stanley

Cerner

Ticker: CERN

EPS growth: 19.7%

PE 2012: 31.9

PEG ratio: 1.6

Cerner is expected to gain market share and is expected to benefit from mid-term stimulus spending on healthcare IT, according to Rick Goldwasser.

Source: Morgan Stanley

cognisant Tech Solutions

Ticker: CTSH

EPS growth: 18.1%

PE 2012: 20.0

PEG ratio: 1.1

cognisant Tech Solutions is expected to gain from global demand for high-quality and cheaper IT services.

Source: Morgan Stanley

Crown Castle

Ticker: CCI

EPS growth: 50.1%

PE 2012: 67.6

PEG ratio: 1.3

The additional towers needed to meet demand for mobile broadband growth will benefit Crown Castle, according to Simone Flannery.

Source: Morgan Stanley

Dollar General

Ticker: DG

EPS growth: 16.8%

PE 2012: 18.5

PEG ratio: 1.1

Dollar General is expected to benefit as consumers that are economizing and operating on a budget, according to Joseph Parkhill.

Source: Morgan Stanley

Dunkin Brands

Ticker: DNKN

EPS growth: 22.4%

PE 2012: 23.0

PEG ratio: 1.0

Dunkin Brands could double its store base as it expands into the west and the company has little exposure to inflation, according to John Glass.

Source: Morgan Stanley

EMC

Ticker: EMC

EPS growth: 16.9%

PE 2012: 15.7

PEG ratio: 0.9

American high tech multinational company EMC Corp is expected to benefit from strong products, investments in emerging technologies and increased distribution, according to Katy Huberty.

Source: Morgan Stanley

F5 Networks

Ticker: FFIV

EPS growth: 19.5%

PE 2012: 24.1

PEG ratio: 1.2

Tech company F5 Networks should gain market share from Cisco as it exits the Application Delivery Controller (ADC) market, according to Ehud Gelblum.

Source: Morgan Stanley

Facebook

Ticker: FB

EPS growth: 29.7%

PE 2012: 40.6

PEG ratio: 1.4

Facebook is a 'global leader in social networking is focused on user utility and delivering engaging experiences for advertisers and developers,' according to Scott Devitt.

Source: Morgan Stanley

Family Dollar

Ticker: FDO

EPS growth: 20.1%

PE 2012: 17.6

PEG ratio: 0.9

Like Dollar General, Family Dollar is also expected to benefit as consumers that are economizing and operating on a budget, according to Joseph Parkhill.

Source: Morgan Stanley

Fortinet

Ticker: FTNT

EPS growth: 18.2%

PE 2012: 50.1

PEG ratio: 2.7

Fortinet should benefit from a long-term shift to consolidated network security and increasing security demand, according to Keith Weiss.

Source: Morgan Stanley

Fresh Market

Ticker: TFM

EPS growth: 27.2%

PE 2012: 41.6

PEG ratio: 1.5

Fresh Market should benefit from the consumer trend in natural and organic foods and in health and wellness, according to Katy Huberty.

Source: Morgan Stanley

Fusion-io

Ticker: FIO

EPS growth: 43.8%

PE 2012: 83.6

PEG ratio: 1.9

Fusion-io benefits from 'first-mover advantage in disruptive flash-based storage solutions that are increasingly used in enterprise and cloud environments,' according to Katy Huberty.

Source: Morgan Stanley

Genesee & Wyoming

Ticker: GWR

EPS growth: 19.9%

PE 2012: 26.3

PEG ratio: 1.3

Railroad holding company Genesee & Wyoming benefits from price and productivity improvements in the sector, according to WIlliam Greene.

Source: Morgan Stanley

GNC

Ticker: GNC

EPS growth: 27.4%

PE 2012: 16.6

PEG ratio: 0.6

Mark Wilatmuth thinks GNC would benefit from rising consumer interest in health and wellness.

Source: Morgan Stanley

Google

Ticker: GOOG

EPS growth: 15.7%

PE 2012: 17.8

PEG ratio: 1.1

Google stands to benefit from the long-term shift to digital advertising, according to Scott Devitt. He projects that the company will post 15 per cent compound earnings growth over the next three years.

Source: Morgan Stanley

Intuitive Surgical

Ticker: ISRG

EPS growth: 16.7%

PE 2012: 34.5

PEG ratio: 2.1

Intuitive Surgical is expected to benefit from little competition in robotic surgery, according to David Lewis. Its revenues are expected to grow 20 - 23 per cent in 2012.

Source: Morgan Stanley

Jive Software

Ticker: JIVE

EPS growth: NM

PE 2012: NM

PEG ratio: NA

Jive Software stands to benefit from end-market demand and should post over 40 per cent revenue growth in the medium term, according to Adam Holt.

Source: Morgan Stanley

Linkedin Corp

Ticker: LNKD

EPS growth: 89.9%

PE 2012: 214.1

PEG ratio: 2.4

LinkedIn has disrupted the traditional recruiting industry, according to Soctt Devitt.

Source: Morgan Stanley

Lululemon Athletica

Ticker: LULU

EPS growth: 29.9%

PE 2012: 40.0

PEG ratio: 1.3

Lululemon's stores could double in five years, according to Kimberly Greenberger.

Source: Morgan Stanley

Marsh & Mclennan

Ticker: MMC

EPS growth: 18.0%

PE 2012: 15.7

PEG ratio: 0.9

Marsh & Mclennan will see strong EPS growth as its property and casualty insurance (P&C) pricing power increases and profit grows, according to Gregory Locraft.

Source: Morgan Stanley

MasterCard

Ticker: MA

EPS growth: 16.1%

PE 2012: 20.7

PEG ratio: 1.3

Mastercard is expected to gain from the global shift to electronic payments from cash/checks, according to Glenn Fodor.

Source: Morgan Stanley

Michael Kors Holdings

Ticker: KORS

EPS growth: 40.0%

PE 2012: 37.2

PEG ratio: 0.9

Michael Kors should expand to 600 stores worldwide, according to Kimbertly Greenberger.

Source: Morgan Stanley

O'Reilly Automotove Inc.

Ticker: ORLY

EPS growth: 19.5%

PE 2012: 18.1

PEG ratio: 0.9

O'Reilly Automotive should benefit from growth in the auto parts retail industry over the next three - five years, according to David Gober. The industry still faces little threat from the eCommerce industry.

Source: Morgan Stanley

Panera Bread Co.

Ticker: PNRA

EPS growth: 21.4%

PE 2012: 29.5

PEG ratio: 1.4

Panera Bread like the rest of the 'quick casual' restaurants is looking at a long-term growth story as it gains market share from typical fast food and casual dining restaurants with better quality, according to John Glass.

Source: Morgan Stanley

PetSmart Inc.

Ticker: PETM

EPS growth: 22.0%

PE 2012: 20.2

PEG ratio: 0.9

The pet supply market is expected to grow three - five per cent in the coming years and PetSmart is expected to grow market share, according to David Gober.

Source: Morgan Stanley

Priceline.com

Ticker: PCLN

EPS growth: 23.3%

PE 2012: 20.6

PEG ratio: 0.9

Priceline.com is expected to gain from the rising trend of booking hotel rooms online, according to Scott Devitt.

Source: Morgan Stanley

QLIK Technologies

Ticker: QLIK

EPS growth: 29.0%

PE 2012: 73.0

PEG ratio: 2.5

'As a market leader in in-memory analytics, QlikTech should disproportionally benefit from the growth in data and data-related spending, gaining share in the analytics platform,' according to Adam Holt.

Source: Morgan Stanley

Rackspace Hosting Inc.

Ticker: RAX

EPS growth: 35.3%

PE 2012: 87.0

PEG ratio: 2.5

Rackspace is expected to benefit from outsourcing in the IT sector, according to Simon Flannery.

Source: Morgan Stanley

Red Hat Inc.

Ticker: RHT

EPS growth: 16.3%

PE 2012: 47.4

PEG ratio: 3.2

Red Hat is expected to gain from its exposure to long-term growth drivers 'around virtualization and the cloud' while and its growing range of products, according to Adam Holt.

Source: Morgan Stanley

Salesforce.com

Ticker: CRM

EPS growth: 25.2%

PE 2012: 101.7

PEG ratio: 4.0

Salesforce.com is 'one of the best secular stories in software' as long-term demand for mobile, social and cloud grows, according to Adam Holt.

Source: Morgan Stanley

Splunk Inc.

Ticker: SPLK

EPS growth: NM

PE 2012: NM

PEG ratio: NA

Splunk is a 'scare pure-play on Big Data' and the company is expected to see strong growth in coming years, according to Adam Holt.

Source: Morgan Stanley

Teradata

Ticker: TDC

EPS growth: 16.9%

PE 2012: 26.4

PEG ratio: 1.6

Teradata gains from being able to gear more of its budget towards data analytics and warehousing, according to Katy Huberty.

Source: Morgan Stanley

Tesla Motors

Ticker: TSLA

EPS growth: NM

PE 2012: NM

PEG ratio: NA

Tesla Motors' disruptive technology i.e. an innovation that disrupts an existing market, can exploit premium car growth, according to Adam Jonas.

Source: Morgan Stanley

Under Armour

Ticker: UA

EPS growth: 34.5%

PE 2012: 45.1

PEG ratio: 1.3

Under Armour could see revenue grow 20 per cent or more over the next several years through product innovation, wider distribution and an increase in the number of factory outlets, according to Joseph Parkhill.

Source: Morgan Stanley

Visa Inc.

Ticker: V

EPS growth: 17.5%

PE 2012: 21.9

PEG ratio: 1.3

Like Mastercard, Visa is expected to gain from the global shift to electronic payments from cash/checks, according to Glenn Fodor.

Source: Morgan Stanley

VMware Inc.

Ticker: VMW

EPS growth: 21.6%

PE 2012: 35.3

PEG ratio: 1.6

VMware still has room for deeper penetration of the sever virtualization market and has a strong, long-term growth story according to Adam Holt.

Source: Morgan Stanley

Whole Foods Market

Ticker: WFM

EPS growth: 22.2%

PE 2012: 39.8

PEG ratio: 1.8

Like Fresh Market, Whole Foods should benefit from the consumer trend in natural and organic foods and in health and wellness, according to Mark Wiltamuth.

Source: Morgan Stanley

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