Volatility risks will increase in 2024 according to experts, but with the right stock selection, outperformance can be achieved. Here are the 3 stocks chosen by Morgan Stanley.
Morgan Stanley has identified 3 stocks that could perform better than others in a context of greater volatility. Many experts agree that in 2024 market volatility will increase from current levels: the VIX, the CBOE index which measures the market’s expectations regarding future volatility, is at around 14.70 points, well below its long-term average of 21.
- VIX volatility index
- Source: Tradingview
The stock market rally, with the S&P 500 breaking historic highs, exceeding the 5,000 point threshold, raises doubts about valuations. Experts at Morgan Stanley are optimistic and believe that earnings estimates for this year will not only maintain their strength but may even see an increase. However, they expect volatility to increase as the presidential election approaches in November and as inflation data continues.
This scenario could create some problems for those wishing to enter the market, but at the same time, it is able to offer interesting investment opportunities. Let’s see the 3 shares chosen by Morgan Stanley in this context.
1) CRH
- CRH stock price
- Source: Tradingview
CRH is one of Morgan Stanley’s choices to intercept the increase in volatility in 2024.
The market leader, both in North America and Europe, in the infrastructure and construction sector is also on the list of the best large-cap stocks to buy in 2024 according to Citi.
In December the construction company said it had completed the final phase of its share buyback program, returning more than $1 billion in cash to shareholders. CRH will release full-year 2023 financial results on February 29.
With a global presence and an established reputation in the industry, CRH is uniquely positioned to capitalize on the increase in infrastructure investment around the world. The company stands out for its ability to provide innovative, high-quality solutions for construction projects of varying complexity, meeting the needs of a wide range of sectors, including commercial construction, road infrastructure, and public infrastructure. Furthermore, its strong international presence offers it geographic diversification that makes it less susceptible to regional economic fluctuations. Investors looking for long-term investment opportunities may find CRH an attractive option, as the company is well positioned to benefit from growing demand for infrastructure and construction around the world. With a solid track record of success and a well-defined growth strategy, CRH represents a reliable pillar for a balanced and future-oriented portfolio.
2) Microsoft
- Microsoft stock price
- Source: Tradingview
Microsoft is among the most promising companies in the technology sector, especially in light of the artificial intelligence boom. Morgan Stanley experts consider Microsoft as one of the main beneficiaries of this trend. The company, included in the prestigious "Magnificent Seven" together with other large companies in the sector such as Alphabet, Amazon, Apple, Meta, Nvidia and Tesla, offers multiple opportunities growth amplified by its leading position in AI, with innovative products such as Copilot, an AI-powered feature for Microsoft 365.
Despite a significant increase in stock value over the past year, Microsoft continues to generate investor enthusiasm, with the majority of analysts recommending the stock to be Buy or Overweight. According to FactSet data, out of 51 analysts who follow the stock, 49 give it a positive rating, with an average target price of $469.94, which implies a growth potential of 16.3%.
These numbers confirm the market’s confidence in the company and its promising future in the technology sector which seems destined to grow further.
3) Ameriprise Financial
Morgan Stanley believes Ameriprise is a buying opportunity following financial results released on January 24th.
- Ameriprice stock price
- Source: Tradingview
In the fourth quarter, adjusted operating earnings per share were $7.20, an increase of 14% to a total of $7.75 when adjusted for charges related to a regulatory provision, severance expenses, and stock impacts at following share price appreciation in the quarter.
According to Ameriprise’s president and CEO, the company’s record results in 2023 can be attributed to strong execution, customer service, and superior performance through market cycles. Assets under management and administration reached $1.4 trillion, up 15% due to net client inflows and market appreciation. Despite a 6% increase in effectively managed general and administrative expenses, Ameriprise maintained solid profitability, with an adjusted operating margin of 24.8%.
The company generates strong cash flow and has a strong balance sheet, enabling a steady return of capital to shareholders: $587 million returned in the quarter and $2.5 billion in the full year. The company also successfully closed its partnership with Comerica Bank in November and received recognition as one of the Best Managed Companies of 2023 on The Wall Street Journal’s Management Top 250 list. These positive results reflect Ameriprise’s strength and growth outlook, confirming Morgan Stanley’s view of the company as an attractive opportunity for investors.
| DISCLAIMER The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings. |
Original article published on Money.it Italy 2024-02-29 16:31:33. Original title: 3 azioni scelte da Morgan Stanley per sfruttare l’aumento di volatilità
