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Morgan Stanley’s Best Idea: GM

Wednesday, 6 Jul 2011 | 5:32 PM ET

If you’re looking for new trading ideas Morgan Stanley suggests looking no further than your own driveway.

The bank surprised the Street and boosted its view on the entire U.S. automotive industry Wednesday, saying that fearful investors have created a potentially lucrative buying opportunity based on the risks facing auto and parts makers over the 12 months.

Analyst Adam Jonas raised his rating for the sector to "Attractive" from "In-Line," noting that the potential rewards for investors in relation to the risks have significantly improved.

Options Desk: MS Bullish on Autos
GM to rally on near-term earnings revisions, with Brian Stutland, Fast Money trader.

And perhaps more surprising, Jonas made GM his top stock pick for the industry, bouncing Ford , the former occupant of that perch.

"We believe GM offers a powerful combination of positive near-term earnings revisions and negative investor sentiment held up by open-ended questions surrounding the U.S. Treasury hangover, UAW negotiations and the deployment of GM's fortress balance sheet," Jonas wrote.

Jonas has a buy rating on GM with a $50 price target.

Fast trader Steve Grasso sees the auto trade a little differently. "GM has unfunded liabilities," he says. "How do you go in and buy GM?" Although he concedes GM may be a short term play he thinks in the long-term Ford is the better bet. If you're a retail investor, "I'd buy Ford over GM," he says.

Although the Morgan Stanley note pertained to the US automotive industry, if you want to look outside the US, Tim Seymour suggests looking at Fiat . Joe Terranova likes Toyota. And Jon Najarian recommends looking at Tata and Nissan .




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Trader disclosure: On July 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stutland owns (C), short (C) calls; Stutland owns (CSCO), short (CSCO) calls; Stutland owns (F); Stutland owns (GE) corporate bonds; Stutland owns (GLD); Stutland owns (GOOG), is short (GOOG) calls; Stutland owns (INTC), is short (INTC) calls; Stutland owns (T) is short (T) calls; Jon Najarian owns (BIDU) calls; Jon Najarian owns (SINA) calls; Jon Najarian owns (UA) calls; Jon Najarian owns (NFLX) calls; Jon Najarian owns (SLV) calls; Jon Najarian owns (SLW) calls; Terranova owns (XOM); Terranova owns (HAS); Terranova owns (DIS); Terranova owns (WFM); Terranova owns (LULU); Terranova owns (MSFT); Terranova owns (TM); Terranova owns (JWN); Terranova owns (MCD); Terranova owns (PEP); Terranova owns (MA); Terranova owns (BX); Terranova owns (CAT); Terranova owns (VRTS); Terranova owns (AAPL); Terranova owns (F); Terranova owns (CVI); Terranova owns (IBM); Terranova owns (FCX); Weiss owns (DE); Weiss owns (NAN); Weiss owns (HBAN); Weiss owns (BTU); Weiss owns (KEY); Weiss owns (CMA); Weiss owns (COP); Weiss owns (HK); Weiss owns (MRK)

For Brian Stutland
Stutland equities is a market maker in in VIX futures and options, S&P 500 options, and VXX stock and options holding positions in all these instruments.
Stutland equities holds positions in SPY stock and options and e-mini S&P 500 futures. All positions are hedged.

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
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CNBC.com with wires.

  Price   Change %Change
F
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F
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GM
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7201.T
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7203.T
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