Morgan Stanley Names Some of Its Top Stock Picks Ahead of Earnings Season

Stone / United Kingdom - February 23 2020: Morgan Stanley and E*TRADE apps seen on the smartphone screen hold in a hand.
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Morgan Stanley has given its thoughts on a number of stocks it feels are set for an increase in the next couple of weeks.

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Twelve analysts from the bank named their “high conviction” European stocks in a published memo, CNBC reports. First-quarter results are expected to exceed the already-high projections for certain European-based corporations and banks.

Their top picks are:

  • Norsk Hydro: Norwegian metals firm
  • Lloyds: U.K. banking group currently holding more than 20% of the U.K.’s market share of mortgages
  • Natwest: Plans to grow market share in mortgages; temporary pause in home taxes put it on path for a strong fourth-quarter report
  • BNP Paribas: Large French investment bank
  • Acerinox: Spanish steel manufacturer Morgan Stanley expects to have higher-than-expected earnings due to claims it has improved its profit margins in a tough year for commodities
  • Coca-Cola Hellenic Bottling Company: Coca-Cola Greece, which, according to Morgan Stanley, has seen strong momentum in emerging markets and shown “superior agility and execution”

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Although European equities have historically performed lower than their U.S. counterparts, Morgan Stanley stated in a report in October that “Europe’s sector-mix shift toward growth-orientated sectors now makes a relatively stronger investment case for the region’s stocks.”

The analysts also noted that 39% of European companies beat “earnings per share estimates by 5% or more in the fourth quarter of 2020 and said the first quarter of the year should be even stronger” CNBC reported.

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However, the bank did note that although this can suggest economic recovery, the pace of upgrades is likely to slow in the coming quarters.

Now could be a good time to add some European stocks to portfolios or get them integrated into your 401(k) if allowable. If you are new to investing, it might be wise to hold off on diving into European index funds. The picks from Morgan Stanley are strong, and it could be wise to add one or two and assess their performance after earnings reports in the coming days and weeks. BNP Paribas has always been a large investment bank mainstay, and Coca-Cola Hellenic operates under the umbrella of Coca-Cola. Norsk and Acerinox were strong performers in the metals space in 2020, a year that was difficult for the sector overall.

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About the Author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience with concentrations in asset management, portfolio management, private client banking, and investment research. Georgina has written for Investopedia and WallStreetMojo. 

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