MORGAN STANLEY: Here Are The 15 Best Stocks For The Next 12 Months

Morgan Stanley analysts published their annual “Vintage Values 2015” report highlighting what they considered to be the best stocks for the next 12 months.

“We selected stocks with over $US1 billion in market cap that look likely to realise superior risk-adjusted returns between now and July 2015,” they wrote

Their research reflects consideration of anticipated events over the next year, and how these events will impact the selected stocks.

Additionally, they note that their Vintage Values portfolio is “biased toward high quality, growth, and large market cap” and trades at a higher P/E valution than the S&P 500.

Abbott Laboratories

Ticker: ABT

Sector: Healthcare

Price Target: 45.00

Div. Yield 2014: 2.1%

According to Morgan Stanley analyst David Lewis, Abbott Laboratories is a 'unique healthcare asset with high exposure to emerging markets and consumer-directed businesses, driving the potential for sustainable double-digit earnings growth'.

Source: Morgan Stanley

Amgen Inc.

Ticker: AMGN

Sector: Healthcare

Price Target: 140.00

Div. Yield 2014: 2.0%

Matthew Harrison of Morgan Stanley writes that they see 'margin expansion and modest pipeline success as offering upside from current levels based on durable base business cash flows that provide downside support'. However, a lack of margin expansion and increased biosimilar competition could lead to an investment risk.

Source: Morgan Stanley

Apple, Inc.

Apple Inc CEO Tim Cook speaks on stage during an Apple event in San Francisco, California October 22, 2013.

Ticker: AAPL

Sector: Technology

Price Target: 98.57

Div. Yield 2014: 1.9%

Katy Huberty of Morgan Stanley writes that they 'expected iPhone share gains and growth re-acceleration driven by (the) larger screen iPhone'. Additionally, they see iWatch and 'new services' helping to 'accelerate growth and expand margins'.

Source: Morgan Stanley

Eaton Corp PLC

Ticker: ETN

Sector: Consumer Discr./Industrials

Price Target: 90.00

Div. Yield 2014: 2.5%

Nigel Coe of Morgan Stanley suggests that there will be a truck and hydraulic rebound in 2014-2015. Additionally, they 'see an upside to the $US325 million cost synergy target'. Finally, they believe that 'the stock is currently trading at a steep discount to peers and an end-market rebound can strengthen the case for a re-rating'.

Source: Morgan Stanley

Estee Lauder Companies

Ticker: EL

Sector: Consumer Staples

Price Target: 87.00

Div. Yield 2014: 1.0%

Dara Mohsenian, CFA writes that they project a 6% long-term organic revenue growth for Estee Lauder because of their 'attractive product category growth in beauty' and because of 'market share gains in the overall beauty segment, with strong growth particularly from expansion in emerging market and high growth in the travel retail and e-commerce channels'.

Source: Morgan Stanley

Hess Corporation

Ticker: HES

Sector: Energy/Utilities

Price Target: 110.00

Div. Yield 2014: 1.0%

Evan Calio of Morgan Stanley writes that the key value drivers of Hess Corporation are production growth, further share repurchases funded by asset divestitures and monetizations, and the highest leverage to higher oil prices.

Source: Morgan Stanley

L Brands Inc.

Ticker: LB

Sector: Retail

Price Target: 66.00

Div. Yield 2014: 3.9%

Morgan Stanley's Kimberly Greenberger sees the value drivers of L Brands Inc. to be store growth, (especially internationally), same store sales, and the continued supply chain improvement, strong sales and inventory management initiatives.

Source: Morgan Stanley

Magna International

Ticker: MGA

Sector: Consumer Discr./Industrials

Price Target: 125.00

Div. Yield 2014: 1.3%

Ravi Shanker of Morgan Stanley writes that the key value drivers of Magna International are that it is a top-5 global supplier with a highly diversified product footprint and it has the industry's strongest balance sheet.

Additionally, 'MGA has eliminated its dual-class share structure by buying out the chairman and founder, which should eliminate historical corporate governance concerns and allow the company to purse a more aggressive growth strategy.'

Source: Morgan Stanley

Monsanto Company

Ticker: MON

Sector: Materials

Price Target: 150.00

Div. Yield 2014: 1.3%

Vincent Andrews of Morgan Stanley writes that they see, 'biotechnology as the longterm key to increasing land productivity, and believe that Monsanto is best positioned to capture increasing value'.

Source: Morgan Stanley

Nike Inc.

Ticker: NKE

Sector: Retail

Price Target: 88.0

Div. Yield 2014: 1.2%

According to Jay Sole, 'Nike dominates the industry and we think it's at a tipping point of major EPS growth acceleration sustaining at 16% 4-year EPS CAGR.' Additionally, it's powerful balance sheet is helping it create a 'virtuous circle of outsized investment spending, operational excellence, brand strength, and ROIC gains'.

Source: Morgan Stanley

XL Group PLC

Ticker: XL

Sector: Financials

Price Target: 39.00

Div. Yield 2014: 1.8%

Kai Pan of Morgan Stanley writes that XL's global diversified insurance franchise allows the company to 'access markets with favourable returns'. Additionally, XL Group has a 'strong balance sheet with $US700 million excess capital' and its discount-to-book valuation provides compelling risk-return.

Source: Morgan Stanley

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