Morgan Stanley says buy these five stocks that haven't caught up to the market yet

John Deere combine harvesters sit on display during the Farm Progress Show in Boone, Iowa, U.S., on Tuesday, Aug. 28, 2018.
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The recent pullback in stocks has paved the way for certain names to start their outperformance, creating a timely opportunity for stock pickers, according to Morgan Stanley.

While the major averages have recovered most of their coronavirus related losses, not every stock has participated in the epic rebound. Morgan Stanley believes it found five buy-rated stocks that haven't caught up to the rest of the market. 

"Cyclicals are dominating, right in line with our Recession Playbook. Nevertheless, the breadth is not as robust as what we experienced in 2009 which was one of our concerns back in August," Morgan Stanley chief U.S. equity strategist Mike Wilson told clients. "We think the recent correction is the beginning of the correction we thought would come last month but will ultimately lead to expanding breadth once it's over."

The major averages have clawed back from the depths of the coronavirus market rout in rapid fashion. The Nasdaq Composite — the first index to rebound to new highs — is up more than 68% from its March low. The S&P 500 also reached a new all time high this month, up 55% since March. The Dow is still down slightly for the year. While markets have experienced the stunning snap-back, the past two weeks have seen a pullback. Morgan Stanley said this selling sets the stage for weaker stocks to start their outperformance.

"We are overweight Industrials as part of our broader pro-cyclical tilt as relative performance hasn't caught up to a number of key indicators," Morgan Stanley chief U.S. equity strategist Mike Wilson told clients.

The Wall Street firm highlighted five of its highest conviction picks for the current climate.