Morgan Stanley released the latest version of its Best Ideas list, which selects the most attractive stocks in terms of their risk/reward profile, whether they have a catalyst on the horizon, and which have been deeply researched.
David Adelman, co-chair of Morgan Stanley's Stock Selection Committee, shared the firm's list with CNBC.
Dollar General — Morgan Stanley expects the discount retailer to excel as consumers exit the recession, despite marketplace concern that shoppers will trade up to higher-priced goods.
"We've done proprietary research that indicates that consumers will be very sticky and will actually spend more in the dollar channel," Adelman said.
DirecTV — The company trades at an average valuation within its sector, and it has a leading rate of free cash-flow growth.
"There's a very good argument that as the economy improves...their revenue per customer, per month is going to accelerate from about 2 percent to 4 percent growth," he said.
Bank of America — Morgan Stanley's large-cap bank analyst is bullish on consumer credit, and Bank of America is the most leveraged. The stock also trades at less than six times normalized earnings and less than 1 time its book value.
"We think as the business environment improves and as confidence in the recovery strengthens, that there's going to be a significant revaluation," he said. "And the best way to play that theme, we feel, is Bank of America."
The other stocks on Morgan Stanley's Best Ideas List:
More Market Views:
The Bear's View:
CNBC Data Pages:
Disclosure information was not immediately available for Adelman or his firm.