Morgan Stanley's 'secular growth' list features stocks that can win in any economy

Published Sat, Jul 24 20217:32 AM EDT

Morgan Stanley just updated its annual list of "secular growth stocks," which are 51 companies the Wall Street firm believes can deliver top-notch growth through their unique strengths. "Secular Growth Stocks is our list of companies, refreshed ~2x/year, that we believe can deliver strong fundamental growth, driven by forces such as sustainable competitive advantages, product cycles, market share gains, or pricing power," Morgan Stanley analysts said in a note to clients. To identify stocks with strong growth characteristics both before and after the pandemic, Morgan Stanley screened the 1,500 largest stocks for the following criteria: The bank's quantitative style model classified as "growth" for the 16 quarters through the fourth quarter of 2019 Stocks that generated positive year-over-year revenue growth in each of the last 12 quarters through the fourth quarter of 2019 Stocks that are expected to generate strong positive revenue growth in 2022 and 2023 Stocks rated overweight or equal weight by Morgan Stanley analysts Analysts' estimates for earnings and revenue look attractive relative to their sector Carvana is highlighted in Morgan Stanley's list of secular growth stocks. Analyst Adam Jonas believes the company has the potential to become the largest used car dealer in the U.S. "Carvana's fully digital experience with full vertical integration — both software and physical inspection recondition centers (IRCs)/logistics — offers a superior consumer experience that can scale profitably," Jonas said. Shares of Carvana have climbed another 41% this year after a whopping 160% rally last year as the pandemic boosted used car sales. The list also features a slew of megacap tech names, including Alphabet , Amazon, Apple, Facebook and Tesla, which are all slated to report quarterly earnings next week. Morgan Stanley is also bullish on Shopify , calling the Canadian start-up "a best-in-class asset." Shopify is "well-positioned to capitalize not just on the general eCommerce tailwind, but also specific trends such as DTC (direct to consumer), the move toward SaaS-based commerce deployments, and omnichannel retailing," analyst Keith Weiss said in a note. The e-commerce platform saw a surge in demand last year as many small business moved operations online during the forced shutdowns. The stock is up 45% after rising 184% in 2020. Farfetch , Mastercard, DraftKings , Lululemon and Five Below are also on Morgan Stanley's list.

Source: NYSE

Morgan Stanley just updated its annual list of "secular growth stocks," which are 51 companies the Wall Street firm believes can deliver top-notch growth through their unique strengths.