MORGAN STANLEY: The 15 Best Stocks For Impatient Investors

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This week, Morgan Stanley published its “Vintage Values 2013” stock list.”We selected stocks with over $750 million in market cap that look likely to realise superior risk-adjusted returns between now and July 2013,” wrote the analysts.

Based on their analysis, these stocks exhibited the best combination of favourable risk-reward profiles and clear catalysts. 

These are also stocks that were out of favour among other Wall Street analysts. 

Anadarko Petroleum

Ticker: APC

Price target: $103

P/E: 17.7

Anadarko has a deep inventory of projects and operates among the best in the industry, but trades at a similar level as the rest of its peers. Expected expansion on several large products within the next 12 months should be a driver for the stock price.

Source: Morgan Stanley

Apple

Ticker: AAPL

Price target: $738

P/E: 12.6

Sector: Technology

Morgan expects the new iPad, a cheaper iPad 2, and the potential iPad mini to drive upside and the return of cash through the announced dividend should help drive the stock upward.

Source: Morgan Stanley

Calpine

Ticker: CPN

Price target: $27

P/E: N/A

Sector: Energy/Utilities

Morgan sees a potential for a roughly $1 billion buyback in the next year and sees margin opportunities for the company in Texas.

Source: Morgan Stanley

Honeywell International

Ticker: HON

Price target: $68

P/E: 11.7

Sector: Consumer Discretionary/Industrials

Honeywell ranks attractively in Morgan's structural margin expansion analysis, due to its productivity improvement and restructuring. The bank expects a $160 million EBIT expansion.

Source: Morgan Stanley

JPMorgan Chase

Ticker: JPM

Price target: $54

P/E: 8.4

Sector: Financials

The CIO trade has made the current price levels of JPMorgan intriguing. Morgan expects significant disclosures in the next few weeks that will re-start JPMorgan's stock toward premium valuations against its competitors.

Source: Morgan Stanley

Kraft Foods

Ticker: KFT

Price target: $44

P/E: 15.3

Sector: Consumer Staples

Benefits from Kraft's pending split have not been fully discounted and the company has an underapprecitate structural growth profile. Along with those factors, Kraft has very strong momentum in North America.

Source: Morgan Stanley

Marsh & McLennan

Ticker: MMC

Price target: $39

P/E: 14.4

Sector: Financials

Marsh is already paying a 3 per cent dividend yield that has been growing at a rate of roughly 45 per cent free cash flow. The large dividend yield provides solid downside protection.

Source: Morgan Stanley

Penn National Gaming

Ticker: PENN

Price target: $53

P/E: 17.3

Sector: Consumer Discretionary/Industrials

The potential for Penn to acquire an asset on the Las Vegas Strip as well as the opening of Ohio casinos going well could drive the stock upward. Penn has low leverage and excess cash, which provides Penn with many different options.

Source: Morgan Stanley

Thermo Fisher Scientific

Ticker: TMO

Price target: $66

P/E: 10.3

Sector: Health Care

Thermo Fisher has an ongoing focus on productivity and cost cutting actions, and an effective use of its capital could move the stock up nicely. It is important for the company to build out its China business, where it is lagging against competitors.

Source: Morgan Stanley

UnitedHealth Group

Ticker: UNH

Price target: $70

P/E: 11.9

Sector: Heanth Care

United's cash position provides it with many options such as dividends or buybacks, and the growth the company has seen in services have been a solid growth kicker. Its diversified platform is also a nice driver.

Source: Morgan Stanley

United Technologies

Ticker: UTX

Price target: $95

P/E: 13.5

Sector: Consumer Discretionary/Industrials

United Technology's unmatched position has driven growth. Morgan believes that aircraft production and resilient after market revenues will drive future growth in the company's aero business.

Source: Morgan Stanley

VF Corp

Ticker: VFC

Price target: $180

P/E: 14.4

Sector: Retail

VFC provides consistent double-digit earnings growth due to higher margins in its outdoor and action sports segment as well as international growth. Morgan identifies at least a $2.6 billion global sales opportunity if VFC can bring its market share up to its average competitors.

Source: Morgan Stanley

Visa

Ticker: V

Price target: $147

P/E: 20.7

Sector: Technology

Just 15 per cent of the world's payment transactions are online, leaving Visa a very large untapped market. If Visa continues its international execution and sustains its debit strategy it should be a nice play over the next year.

Source: Morgan Stanley

Watson Pharmaceuticals

Ticker: WPI

Price target: $84

P/E: 12.3

Sector: Health Care

The acquisition of Actavis should become a large part of Watson's business and help them continue to grow rapidly. OxyContin as a $2.8 billion brand that continues to grow is a strong source of the company's revenue.

Source: Morgan Stanley

Williams Companies

Ticker: WMB

Price target: $38

P/E: 20.2

Sector: Energy/Utilities

Long term demand in natural gas and liquids should help WMB as much as any other company. Additionally, Morgan believes the outlook on WMB's Canadian segment is great.

Source: Morgan Stanley

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