Here are 4 'high conviction' stock ideas from Morgan Stanley — including JP Morgan Chase

Published Fri, Jun 1 20182:51 PM EDT

Morgan Stanley shared with its clients the firm's best current stock picks. "The Alpha Almanac summarizes Morgan Stanley Research's Global Economics and Strategy macro forecasts and collects a list of Sector Research's high conviction, differentiated single stock calls across the US," equity strategist Michael Wilson said in a report Friday. Here are four overweight-rated companies that made the Morgan Stanley's recommended list and their price targets. 1) Constellation Brands (STZ) Morgan Stanley analyst Dara Mohsenian has a $262 price target for Constellation Brands shares, representing 17.5 percent upside to Thursday's close. "STZ is our top pick in beverages, as our analyses (top down segment build, bottom up brand build distribution analysis) show the beer segment can grow at a 9-10% rate over the medium-term, well above the ~7% pace we estimate the market is pricing into valuation. Outsized topline growth is augmented by a structural margin story via a combination of building brewery productivity, price/mix benefits, and fixed cost leverage." 2) FTS International (FTSI) The firm's analyst Connor Lynagh has a $30 price target for FTS International shares, representing 58 percent upside to Thursday's close. "FTSI is one of the largest hydraulic fracturing companies in the United States. Aside from its top-tier operational results, FTSI is differentiated because it internally manufactures most of the major components, which gives it a substantial operating and capital cost advantage vs. peers. We expect industry supply-demand to remain well-balanced as demand and supply grow in tandem this year, which we think will lead to stable pricing for companies like FTSI." 3) J.P. Morgan Chase (JPM) Morgan Stanley analyst Betsy Graseck has a $135 price target for J.P. Morgan Chase shares, representing 26 percent upside to Thursday's close. "JPM is our top pick among the US money center banks. Its push into new markets, opportunity to gain share, efficiency improvements, and benefit from deregulation all drive our positive long-term view. JPM is opening 400 branches to enter into 15-20 new markets over the next 5 years, and we expect JPM can reach top 5 in each of these new markets as they take share from other bulge bracket banks." 4) Alcoa (AA) The firm's analyst Piyush Sood has a $60 price target for Alcoa shares, representing 25 percent upside to Thursday's close. "Alcoa is a high-conviction Overweight idea in NA Metals and Mining universe due to its attractive cash flow generation profile and positive long-term trends supporting prices in the aluminum complex. AA is a key beneficiary of US tariffs on imported aluminum which will help the company restart smelting capacity in the US. China supply side reforms and focus on environmental policy are sustainable drivers of global long-term aluminum and alumina prices."

Bank customers use ATMs at a Chase Bank branch in New York City.

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Morgan Stanley shared with its clients the firm's best current stock picks.

"The Alpha Almanac summarizes Morgan Stanley Research's Global Economics and Strategy macro forecasts and collects a list of Sector Research's high conviction, differentiated single
stock calls across the US," equity strategist Michael Wilson said in a report Friday.

Here are four overweight-rated companies that made the Morgan Stanley's recommended list and their price targets.

1) Constellation Brands (STZ)

Morgan Stanley analyst Dara Mohsenian has a $262 price target for Constellation Brands shares, representing 17.5 percent upside to Thursday's close.

"STZ is our top pick in beverages, as our analyses (top down segment build, bottom up brand build distribution analysis) show the beer segment can grow at a 9-10% rate over the medium-term, well above the ~7% pace we estimate the market is pricing into valuation. Outsized topline growth is augmented by a structural margin story via a combination of building brewery productivity, price/mix benefits, and fixed cost leverage."