Morgan Stanley has released its “Secular Growth Stocks” list for 2021, as reported by CNBC on Wednesday.
Analysts at the investment bank said it based the selection of stocks on criteria like sustainable competitive advantages, product cycles, market share gains, and pricing power that would drive strong growth.
The stocks included in the list — which features Apple Inc. (NASDAQ: AAPL) and Tesla Inc. (NASDAQ: TSLA) — all have “reasonable valuations” and only stocks rated Overweight or Equal Weight by Morgan Stanley analysts are included, the report says, as per CNBC.
The stocks in the list, also featuring Amazon.com Inc. (NASDAQ: AMZN) and Alphabet Inc. (NASDAQ: GOOGL) (NASDAQ: GOOG), are expected to generate positive revenue growth in the two fiscal years following 2020, as per one of the criteria chosen by Morgan Stanley.
The investment bank, which recently upgraded Tesla to Overweight, said the electric vehicle maker is anticipated to generate a “higher percentage of revenue from recurring/high-margin services revenue.”
Amazon has benefited from the COVID-19 pandemic and is well-positioned for the post-pandemic era with the expansion of its fulfillment and shipping network, as per Morgan Stanley. Advertising, subscriptions, and cloud segment seeing fast growth also contributes to the bank’s outlook of the e-commerce giant.
Apple’s addition is primarily based on the outlook for the new line of 5G iPhones, as per CNBC. Morgan Stanley also sees Google parent Alphabet as a secular growth play based on advertising segment and video streaming through YouTube.
Docusign Inc. (NASDAQ: DOCU) also features as a secular play, having established as the leader of the $25 billion+ eSignature market, Morgan Stanley reportedly noted.
Other secular growth stocks listed by the investment bank, as per CNBC, include:
Chewy Inc. (NYSE: CHWY)
Datadog Inc. (NASDAQ: DDOG)
Equinix Inc. (NASDAQ: EQIX)
Facebook Inc. (NASDAQ: FB)
Lulumelon Athletica Inc. (NASDAQ: LULU)
Mastercard Inc. (NYSE: MA)
Microsoft Corporation (NASDAQ: MSFT)
Netflix Inc. (NASDAQ: NFLX)
Prologis Inc. (NYSE: PLD)
Salesforce.com Inc. (NYSE: CRM)
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