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Morgan Stanley says buy dip on these 5 global stocks

Global markets have been hit by a number of macro headwinds, but Morgan Stanley sees opportunities for investors to plunge into “fallen angels” – stocks that the bank believes have sold significantly and now look attractive. With MSCI Europe down almost 14% this year, Morgan Stanley believes that European equities have been oversold, with the index now trading below its long-term median futures price-to-earnings ratio ̵[ads1]1; an important calculation used by traders to measure the value of a resource. However, despite oversold conditions and lower valuations, the bank said it was still cautious about European equities. “On the balance sheet, we see stock valuations as reasonably attractive rather than particularly cheap, especially since the fundamentals of corporate earnings are beginning to look quite challenging,” Morgan Stanley’s strategist, led by Ross MacDonald, said in a May research note. 24. However, the bank acknowledged that there are pockets of opportunity for the list of “fallen angels”. “We recognize that for a number of stocks and sectors, the underperformance has already been extreme. Given this, we believe that investors are likely to sharpen their pencils on individual names where the recession risk is beginning to look priced in / risk rewards look appealing.” in MacDonald. “Although we are tactically cautious, we believe there is a growing appetite for investors to build positions in ‘good companies at a better price’ – stocks where poorer performance has recently created an attractive entry point for patient investors,” he added. CNBC Pro puts the spotlight on five of Morgan Stanley’s “fallen angels”. Capgemini Morgan Stanley sees the French consulting firm Capgemini as a “safe haven” stock for an “attractive valuation”. The bank noted that the company has been relatively defensive and has performed well through the coronavirus pandemic. Capgemini is also exposed to structural technology themes, such as demand acceleration for digital transformation and digital production / industry 4.0. The bank sees the share as attractively valued for that growth opportunity and has attributed a price target of 237 euros ($ 254) to the share. This implies a potential upside of 31.3% to the share price closing at 180.5 euros on 31 May. Deutsche Post Banken believes that e-commerce is a secular trend that is “here to stay” – despite the normalization in the sector this year and a possible decline in consumption. Morgan Stanley noted that Deutsche Post has invested in automation and digitization of operations, as well as expanding the customer base – all of which had resulted in growth in both capacity and the addressable market. The stock also looks cheap compared to its peers, MacDonald noted, with stock trading at a discount to its peers in the US – a discount of 45% and 10% respectively to UPS and Fedex. “We think these discounts are excessive,” he added. EssilorLuxottica Morgan Stanley believes that the company’s revenue profile is the most robust among its peers. “Given the market’s concerns about the vulnerability of consumer sentiment, we see EssilorLuxottica as one of the safest plays for consumer investors, given its health-driven revenue profile,” said MacDonald. The bank has forecast the company to achieve a compound five-year earnings growth of 11%. This will mainly be driven by synergies and product innovation. The bank believes that the company offers “a far greater level of [earnings] visibility “in relation to other consumer and brand names. LVMH The bank said that LVMH remains a” top choice “in a sector that has been reduced since the end of 2021, and describes the company as a” structural market share winner “in almost all the companies where it In addition, LVMH is the only player with exposure to the reopening trade in the luxury area, the bank added. Despite the market rotation away from growth and technology stocks, Morgan Stanley said they remain “confident” that SAP can perform “relatively well” in a downturn given its recurring revenue mix and product offerings that can help companies reduce costs. “SAP “offers a mix of high recurring revenue, strong drivers for product and market demand and a valuation now below previous floor levels,” said MacDonald. gsa to see a “positive catalyst” in SAP’s cloud business. advice.
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Global markets have been hit by a number of macro headwinds, but Morgan Stanley sees opportunities for investors to plunge into “fallen angels” – shares that the bank believes have sold out significantly and now look attractive.