Morgan Stanley is Recommending These 13 Stocks for 2024
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In this article, we will take a detailed look at Morgan Stanley is Recommending These 13 Stocks for 2024. For a quick overview of such stocks, read our article Morgan Stanley is Recommending These 5 Stocks for 2024.
Investors are slowly but surely coming to terms with the reality that the Fed will not be as quick to announce a victory in its battle against inflation as they'd expected in the last few weeks of 2023. Economic growth is also expected to remain muted this year. Argus Research in its 2024 market outlook report said that the US economy saw peak growth in the third quarter of 2023 and it is "unlikely that GDP growth will be even half of that rate in the first six months of 2024." The main reason behind this expectation, according to Argus, is the decline in US household savings accumulated during the pandemic days that kept things afloat in 2023 despite tough economic conditions. Despite this, Argus expects the stock market to grow in 2024 and earnings to expand.
"Meantime, stock valuations have improved during 2023 despite the start of a new bull market. At times last year, our Stock/Bond Barometer was signaling that stock prices were more than one standard deviation above normal, due to slowing earnings growth, and high inflation and interest rates. Currently, however, the Barometer is indicating that stocks are as close to fair value as they have been since 1Q22. On more traditional valuation measures, the current forward P/E ratio on the S&P 500 of 16.7x is below the recent peak of 22x; the current price/sales ratio of 2.3x is below the 1Q22 ratio of 3.0x; and the cur rent dividend yield of 1.6% is higher than the 1Q23 yield of 1.3%. We look for stock valuation multiples to widen modestly in 2024, aiding equity market returns."
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In December, Morgan Stanley published its Equity Sales Global Thoughts, Themes and Ideas report in which it mentioned a list of stocks it labeled "global single name stocks longs" for 2024. From this list of stocks we picked 13 stocks with the highest number of hedge fund investors. Why hedge funds? Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator. Some top names in the list include Walt Disney Co (NYSE:DIS), Intel Corp. (NASDAQ:INTC) and NextEra Energy Inc. (NYSE:NEE).
13. Lazard Inc (NYSE:LAZ)
Number of Hedge Fund Investors: 13
Financial advisory and asset management company Lazard Inc (NYSE:LAZ) ranks 13th in our list of the best stocks to buy in 2024 according to Morgan Stanley.
Wolfe Research analyst Steven Chubak earlier this month upgraded Lazard Inc (NYSE:LAZ) to Outperform from Peer Perform.
As of the end of the third quarter of 2023, 11 hedge funds tracked by Insider Monkey had stakes in Lazard Inc (NYSE:LAZ).
12. Varonis Systems Inc (NASDAQ:VRNS)
Number of Hedge Fund Investors: 26
Security software company Varonis Systems Inc (NASDAQ:VRNS) ranks 12th in our list of the best stocks to buy for 2024 according to Morgan Stanley. The investment firm said in its December 2023 report that Varonis Systems Inc (NASDAQ:VRNS) stock has a 49% upside to bull case. Susquehanna in December also gave a bullish rating to the stock along with several other cybersec names as the firm believes spending in the sector will continue to rise amid online threats.
Out of the 910 funds tracked by Insider Monkey, 26 hedge funds reported having stakes in Varonis Systems Inc (NASDAQ:VRNS).
11. Seagate Technology Holdings PLC (NASDAQ:STX)
Number of Hedge Fund Investors: 31
Seagate Technology Holdings PLC (NASDAQ:STX) ranks 11th in our list of the best stocks to buy for 2024 according to Morgan Stanley.
BMO Capital also recently published a list of tech stocks at the bottom 90% market cap with the highest growth at a reasonable price. Seagate Technology Holdings PLC (NASDAQ:STX) made it to the list. Here is what BMO said about these stocks:
“When putting technology performance trends into a broader two-year time frame, the trends are certainly not stretched by any means and are about average when compared with the post-tech bubble period. Our analysis suggests that the sector outperforms about 80% of the time in the year following similar two-year performance levels.”
10. L3Harris Technologies Inc (NYSE:LHX)
Number of Hedge Fund Investors: 44
Aerospace and defense company L3Harris Technologies Inc (NYSE:LHX) is one of best stocks to buy for 2024 according to Morgan Stanley. The investment firm said in its Equity Sales Global Thoughts, Themes and Ideas report published in December 2023 that there's a 34% upside to base case for L3Harris Technologies Inc (NYSE:LHX) in 2024.
As of the end of the third quarter of 2023, 44 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in L3Harris Technologies Inc (NYSE:LHX), up from 33 hedge funds in the previous quarter. This shows a remarkable jump in hedge fund sentiment for the stock.
Like LHX, hedge funds are also bullish on Walt Disney Co (NYSE:DIS), Intel Corp. (NASDAQ:INTC) and NextEra Energy Inc. (NYSE:NEE).
Diamond Hill Mid Cap Strategy made the following comment about L3Harris Technologies, Inc. (NYSE:LHX) in its Q3 2023 investor letter:
“L3Harris Technologies, Inc. (NYSE:LHX) is a defense contractor focused primarily on communications, surveillance and electronic warfare. We anticipate the US’s defense budget will be better than expected over the next few years as the Defense Department focuses on preparing for peer-level threats — an area in which LHX’s capabilities fit nicely. We believe there is room for improvement in recent execution — particularly at recently acquired Aerojet Rocketdyne — and we think LHX’s new management team is well-qualified to improve results. We accordingly capitalized on a recent share-price decline to initiate a position at what we consider a compelling valuation.”
9. Discover Financial Services (NYSE:DFS)
Number of Hedge Fund Investors: 46
Morgan Stanley in December 2023 recommended investors to buy financial services company Discover Financial Services (NYSE:DFS) for 2024. The investment firm said the stock has a 36% upside to bull case. Over the past one year the stock has lost about 9% in value. Discover Financial Services (NYSE:DFS) has a dividend yield of about 2.5%.
During the fourth quarter Discover Financial Services (NYSE:DFS) posted GAAP EPS of $1.54, missing estimates by $0.93. Revenue in the quarter jumped 12.9% year over year to $4.2 billion, beating estimates by $90 million.
8. NU Holdings Ltd (NYSE:NU)
Number of Hedge Fund Investors: 50
Digital banking company NU Holdings Ltd (NYSE:NU) is one of the best stocks to buy for 2024 according to Morgan Stanley.
White Falcon Capital Management stated the following regarding Nu Holdings Ltd. (NYSE:NU) in its fourth quarter 2023 investor letter:
“The top 5 positions in the portfolio were: Precious Metals royalty basket, Nu Holdings Ltd. (NYSE:NU), AMD Amazon.com and Converge Technology Services. We often talk about our investment in Nu Holdings but have not presented you with a detailed research report. Our cost base on Nu is about $4 per share while the stock is currently trading for $9 per share. We continue to hold this position and, in the appendix to this letter, we are attaching our thesis on Nu Holdings. We are of the opinion that Nu is a rare company with the powerful combination of substantial market opportunity, an excellent business model, and an outstanding management team.
7. Devon Energy Corp (NYSE:DVN)
Number of Hedge Fund Investors: 52
Devon Energy Corp (NYSE:DVN) is one of the top stocks recommended by Morgan Stanley for 2024. The firm said in December the stock has a 57% upside to bull case.
BMO Capital earlier this month published a list of January 2024 laggards it believes will outperform for the rest of the year. Devon Energy Corp (NYSE:DVN) made it to the list. Here is what BMO said about these stocks:
“January underperformers go on to produce relatively high January 31 through December 31 returns, on average, handily exceeding the overall index returns. Therefore, we believe it makes a lot of sense for investors to explore opportunities within these stocks, particularly at this point of the year.”
A total of 52 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Devon Energy Corp (NYSE:DVN). The biggest stakeholder of Devon Energy Corp (NYSE:DVN) during this period was Donald Yacktman's Yacktman Asset Management which owns a $145 million stake in Devon Energy Corp (NYSE:DVN).
6. Biogen Inc (NASDAQ:BIIB)
Number of Hedge Fund Investors: 57
Biotech company Biogen Inc (NASDAQ:BIIB) ranks sixth in our list of the best stocks for 2024 recommended by Morgan Stanley. Morgan Stanley said in its December report that the stock has a 41% upside to base case.
Earlier this month, Baird gave a bullish outlook on the biotechnology sector as it believes rate cuts in 2024 would bode well for the broader biotech industry. Baird also believes biotech stocks could continue the momentum of the last quarter of 2023. Biogen Inc (NASDAQ:BIIB) is amongst its top favorite biotech stocks for 2024. In addition to Walt Disney Co (NYSE:DIS), Intel Corp. (NASDAQ:INTC) and NextEra Energy Inc. (NYSE:NEE), Biogen is a top stock recommendation from Morgan Stanley.
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Disclosure. None. Morgan Stanley is Recommending These 13 Stocks for 2024 was initially published on Insider Monkey.