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Investors may be feeling some market indigestion in August, but Morgan Stanley said there are still top stocks to buy settle down portfolios. CNBC Pro combed through recent Morgan Stanley research to find the well positioned stocks for August. In particular, Morgan Stanley said it's impressed by Keurig's commitment to improve coffee fundamentals. Morgan Stanley gave several reasons in its earnings reaction note as to why CBOE is well-positioned as a top pick. Howmet Aerospace Meanwhile, shares of Howmet Aerospace are up over 25% this year, but the stock has plenty more room to run, according to Morgan Stanley.
Persons: Morgan Stanley, Dr Pepper, Dara Mohsenian, Mohsenian, it's, Keurig's, Michael Cyprys, Cyprys, Kristine Liwag, Howmet, Liwag, Pepper Organizations: CNBC, CBOE, Chicago, Howmet, Howmet Aerospace, Airbus, Boeing, Commercial Locations: Europe, 2H23
Recent market volatility and uncertainty regarding the U.S. economy has Wall Street analysts torn about where some stocks are headed in the upcoming months. The stock has buy or overweight ratings from 20% of analysts, while another 20% rates it as sell or underweight. More than half of the analysts covering the stock give it a buy rating. Nonetheless, 24% of analysts have a sell rating on it. More than 30% of analysts have buy ratings on the stock, whereas 23% have a sell rating.
Organizations: ~$ $
Morgan Stanley is taking a step back on shares of Charles Schwab even after the stock's significant March slump. Analyst Michael Cyprys downgraded the financial services company to equal weight from overweight, citing an uncertain earnings outlook that makes the risk-reward balance for shares appear less compelling. SCHW YTD mountain Charles Schwab shares in 2023 The collapse of Silicon Valley Bank earlier this month rattled the investing community, sending shockwaves across the broader banking industry and financial markets. Cyprys views the continued migration of cash deposits into money funds as a pressure point likely to weigh on Schwab's near-term earnings outlook. "Limited visibility around timing/magnitude of cash sorting bottoming out, likely weighs on valuation NT," he wrote.
Financial services stocks took a spill as SVB Financial Group's distress cued a sell-off in banks, but investors should use the decline to snap up shares of Charles Schwab on the cheap. Charles Schwab shares dipped more than 7% on Friday morning, following a nearly 13% decline during Thursday's trading session. SCHW 5D mountain Significant decline in Charles Schwab shares following SVB Financial's announcement The significant drop in financial services stocks has been fueled by a massive sell-off of tech-focused bank SVB Financial's shares. However, several analysts believe that such fears are overblown and remain bullish on Charles Schwab, saying that the current decline presents a promising entry point into Schwab's shares. UBS has a buy rating on Charles Schwab shares.
BREIT, as the large real-estate fund is known, has been key to the firm's retail investor push. Blackstone, the $951 billion private-equity behemoth, is better known for its big buyouts, splashy deals, and real-estate market domination than its products catering to individuals. BREIT, as the real-estate fund is known, has posted a return of 9.3% so far this year and a 15.5% three-year annualized return, according to its website. But investor sentiment has appeared to turn for this real-estate fund, posing a challenge for the firm's retail push. Last month, Credit Suisse downgraded Blackstone stock over concerns in BREIT and BCRED.
Morgan Stanley named exchange operator Cboe Global Markets a top pick, noting the stock would benefit from the volatility that typically accompanies the final months of a bear market. "We see Cboe as a defensive beneficiary against a more challenging macro backdrop as elevated market volatility should support the outlook for trading volumes," he said in a note to clients. He pointed to data showing S & P 500 options and total index options were up 88% and 75%, respectively, in October compared to the prior year. To be sure, he said the company's performance could be impacted if market volatility is meaningfully different than what is expected or if there are notable changes to the market that change investor strategy away from short-term movements. "The index options franchise continues to benefit from increased engagement, elevated volatility, and new product innovations that drive volumes to new records," he said.
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