Analysts at Morgan Stanley recently unveiled a slew of must-own stocks for 2024. These names have substantial upside and are great buys now, according to the firm. CNBC Pro combed through recent research to find Morgan Stanley’s best ideas for the new year. They include Spotify, T-Mobile, Howmet Aerospace , BlackRock and UnitedHealth. T-Mobile Morgan Stanley is betting on wireless growth this year. The firm said it sees a slew of positive catalysts ahead for T-Mobile with the cellular giant poised to take market share. Analyst Simon Flannery likes the company’s robust capital return program and its “network and value offerings.” “The ongoing capital return program implies about $12bn in stock repurchases for 2024, with a new larger program likely late next year.” he added. T-Mobile is also still enjoying the fruits of its 2020 merger with Sprint , according to the firm. “Margins have been supported by ongoing productivity initiatives and, in the case of T-Mobile, merger synergies, with AI providing an additional opportunity going forward,” he wrote. This is all the more reason to buy the stock now, the analyst said. “Our top pick is T-Mobile,” Flannery said. Shares are up 13% over the past year. Howmet Aerospace Howmet is the firm’s top pick in aerospace for 2024, according to analyst Kristine Liwag. Morgan Stanley said in a recent note that the company has a wide appeal for investors. In particular, Howmet has exposure to original equipment manufacturing, in addition to the aftermarket. “We continue to see Howmet as best positioned for the commercial aerospace upcycle from the increases in new aircraft builds and spares,” she wrote. Liwag likes the company’s “underlevered” balance sheet and “room for multiple expansion.” This makes Howmet “well positioned for capital return in 2024 and beyond,” she added. Pricing power also remains front and center, she wrote, as the demand for aircraft parts intensifies. Meanwhile, the stock is up nearly 37% over the past 12 months. “HWM offers a great blend of growth and quality with a strong management team,” Liwag said. Spotify Morgan Stanley is sticking with Spotify as its top pick this year. Analyst Benjamin Swinburne said that “more good news [is] ahead” for the streaming music company. The firm said trends appear strongest for music entertainment companies like Spotify. One major reason, Swinburne said, is pricing power. “We have only seen the first round of price increases in streaming music and the first move towards optimizing royalty payments,” the analyst wrote. The price hikes are likely to deliver a major boost to revenues, he added. Shares of Spotify are up 137% over the last year. “With a long global runway for streaming music adoption, we maintain SPOT as our Top Pick given a differentiated earnings outlook,” Swinburne said. BlackRock “Adding selective risk with BLK to Top Pick given scope for fixed income rotation to support re-acceleration of inflows & attractive valuation. … We remain selective, preferring Top Pick BLK (and recently added it to our Financials’ Finest list) given its exposure to growth opportunities (fixed income, index, ESG, private markets, tech revs) and best mix of product, distribution breadth, and scale to capture rotation into fixed income.” T-Mobile “Our Top Pick is T-Mobile; The ongoing capital return program implies about $12bn in stock repurchases for 2024, with a new larger program likely late next year. … Market leadership on network and value offerings. … Margins have been supported by ongoing productivity initiatives and, in the case of T-Mobile, merger synergies, with AI providing an additional opportunity going forward.” UnitedHealth “UnitedHealth is healthcare’s most scaled and diversified services company offering resiliency through the company’s integrated businesses. In health insurance, scale is king and UNH is the largest national insurer with top three position in almost all insurance end markets. … A strong balance sheet and continued solid cash generation give flexibility for continued M & A.” Howmet Aerospace “Our top Aerospace pick is OW-Howmet as it has both OE and aftermarket exposure, room for multiple expansion, an underlevered balance sheet poised for capital return, and strong pricing power. … TDG and HWM Remain Well Positioned for Capital Return in 2024 & Beyond. … We continue to see Howmet as best positioned for the commercial aerospace upcycle from the increases in new aircraft builds & spares. … HWM offers a great blend of growth and quality with a strong mgmt team.” Spotify “We have only seen the first round of price increases in streaming music & the first move towards optimizing royalty payments — we see more good news ahead. With a long global runway for streaming music adoption, we maintain SPOT as our Top Pick given a differentiated earnings outlook. … While SPOT shares have performed well, the market continues to value a greater share of streaming music value to the labels when adjusted for market share of the supply (label) & demand side of the market.”
