Investors may be experiencing some market indigestion in August, but Morgan Stanley believes there are still top stocks that can settle down portfolios. The bank has identified several companies that it believes can weather the latest market weakness.
One of the recommended stocks is Keurig Dr Pepper, the beverage and coffee maker. Analyst Dara Mohsenian is particularly bullish on the company, citing its strong second-quarter earnings report and positive outlook. Mohsenian sees several positive catalysts for Keurig, including an upcoming coffee inflection and strong international performance. Despite a 5% decline in shares this year, Mohsenian believes the stock remains compelling.
CBOE Global Markets, which operates exchanges including the Chicago Board Options Exchange, is another top pick. Analyst Michael Cyprys notes the company’s growth initiatives, improving revenue outlook, and positive operating leverage. Cyprys also highlights CBOE’s product innovation, including the launch of single stock options on leading European companies. Shares of CBOE have risen almost 20% this year.
Howmet Aerospace, an aerospace component company, is also recommended by Morgan Stanley. Analyst Kristine Liwag raised her price target on the stock after the company’s strong earnings report. Liwag sees further upside for Howmet due to its strong cash generation and favorable market conditions. Increased production rates at Airbus and Boeing are expected to serve as catalysts for the stock.
Finally, Apple is named as a top pick due to several catalysts that can drive its re-rating. These include a stronger iPhone 15 cycle, reaccelerating Services growth, underappreciated gross margin tailwinds, new product launches, and the potential for a hardware subscription launch.
In summary, Morgan Stanley Believes that investors can find opportunities in the market despite recent volatility. These top stocks offer strong growth prospects and are well-positioned to weather market weakness.
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