MORGAN STANLEY: These 16 stocks could get cut in half — or worse

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  • Morgan Stanley expects the US stock market to consolidate the secular bull run next year.
  • But the analysts say 16 companies are “facing challenges that are independent of cyclical trends” and could lose more than half their value in the next 12-18 months.
  • The firm has an “underweight” rating for all of the mentioned stocks, and says their risks are larger than rewards.

Morgan Stanley has released the stocks its analysts think could lose more than half their value within the next 12 to 18 months.

These companies are “facing challenges that are independent of cyclical trends,” the bank’s analysts said.

They expect the US stock market to consolidate the secular bull run next year and for US economic growth to slow down, followed by a re-acceleration in 2020. While the macro outlook seems favorable, analysts identified some companies with secular challenges including market-share loss, rising competition, deteriorating end-markets, cost pressures, and others.

To compile the list, Morgan Stanley’s equity-research team started with the stocks its analysts rated as “underweight.” The bank then focused on stocks with an “unfavorable risk-reward skew,” looking for stocks where the cons outweighed the pros.

Here are the 16 stocks Morgan Stanley says stand to lose the most from secular pressures in the next 12-18 months:


16. Macy’s

MI

Ticker: M

Sector: Retail

Year-to-date performance: +30%

Source: Morgan Stanley


15. Patterson Companies

MI

Ticker: PDCO

Sector: Healthcare

Year-to-date performance: -33%

Source: Morgan Stanley


14. United Natural Foods

MI

Ticker: UNFI

Sector: Retail

Market Cap: $1.12 billion

Year-to-date performance: -57%

Source: Morgan Stanley


13. Kohl’s

MI

Ticker: KSS

Sector: Retail

Market Cap: $10.95 billion

Year-to-date performance: +20%

Source: Morgan Stanley


12. Henry Schein

MI

Ticker: HSIC

Sector: Healthcare

Market Cap: $12.88 billion

Year-to-date performance: +26%

Source: Morgan Stanley


11. Waddell & Reed Financial

MI

Ticker: WDR

Sector: Financials

Market Cap: $1.57 billion

Year-to-date performance: -6%

Source: Morgan Stanley


10. Juniper Networks

MI

Ticker: JNPR

Sector: Technology

Market Cap: $9.55 billion

Year-to-date performance: +2%

Source: Morgan Stanley


9. MSG Networks

MI

Ticker: MSGN

Sector: Media

Market Cap: $1.65 billion

Year-to-date performance: +23%

Source: Morgan Stanley


8. Fitbit

MI

Ticker: FIT

Sector: Financials

Market Cap: $1.36 billion

Year-to-date performance: -8%

Source: Morgan Stanley


7. Bed Bath & Beyond

MI

Ticker: BBBY

Sector: Transportation

Market Cap: $1.79 billion

Year-to-date performance: -41%

Source: Morgan Stanley


6. Abercrombie & Fitch

MI

Ticker: ANF

Sector: Retail

Year-to-date performance: +7.5%

Source: Morgan Stanley


5. Tenneco

MI

Ticker: TEN

Sector: Consumer Discretionary/Industrials

Market Cap: $1.95 billion

Year-to-date performance: -42%

Source: Morgan Stanley


4. Avis Budget

MI

Ticker: CAR

Sector: Consumer Discretionary/Industrials

Market Cap: $2.295 billion

Year-to-date performance: -33%

Source: Morgan Stanley


3. EQT

MI

Ticker: EQT

Sector: Technology

Market Cap: $4.75 billion

Year-to-date performance: -41%

Source: Morgan Stanley


2. Seaspan

MI

Ticker: SSW

Sector: Transportation

Market Cap: $1.64 billion

Downside to bear: 89.2%

Year-to-date performance: +37%

Source: Morgan Stanley


1. Hertz Global

MI

Ticker: HTZ

Sector: Retail

Market Cap: $1.61 billion

Year-to-date performance: -20%

Source: Morgan Stanley


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