This article presents an overview of Morgan Stanley is Recommending These 5 Stocks for 2024. For a detailed overview of such stocks, read our article, Morgan Stanley is Recommending These 13 Stocks for 2024.
5. Target Corp. (NYSE:TGT)
Number of Hedge Fund Investors: 58
Morgan Stanley said in its December 2023 report that Target Corp. (NYSE:TGT) had a 39% upside to bull case. In a separate report, Morgan Stanley included Target Corp. (NYSE:TGT) in its list of high quality growth stocks it believes could outperform.
As of the end of the third quarter of 2023, 58 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Target Corp. (NYSE:TGT). The biggest hedge fund stakeholder of Target Corp. (NYSE:TGT) during this period was Ric Dillon’s Diamond Hill Capital which owns a $314 million stake in Target Corp. (NYSE:TGT).
In its fourth quarter 2023 investor letter, ClearBridge Large Cap Growth Strategy stated the following regarding Target Corporation (NYSE:TGT):
“Other meaningful moves during the quarter included additions to cyclical growers we consider early cycle consumer plays: Target Corporation (NYSE:TGT), a position initiated in the third quarter, and Estee Lauder. As earnings start to recover, these stocks and semiconductors tend to be among the first to move. We may be a little early and could see some choppiness in stock prices as job growth and consumer spending cool due to the lagged effects of Fed tightening, but we believe we’re closer to the bottom in terms of economic activity and that both companies, as well as Union Pacific, are well-positioned to benefit as consumer sentiment improves and the economy begins to recover.”
4. NextEra Energy Inc. (NYSE:NEE)
Number of Hedge Fund Investors: 58
NextEra Energy Inc. (NYSE:NEE) is one of the top single name longs from Morgan Stanley for 2024. Morgan Stanley in its December 2023 report that the stock has a 31% upside to base case.
ClearBridge All Cap Value Strategy made the following comment about NextEra Energy, Inc. (NYSE:NEE) in its Q3 2023 investor letter:
“Many businesses are threatened by a higher cost of capital, but one where reality has set in, and which also touches many other growth areas of the market, is the utility company NextEra Energy, Inc. (NYSE:NEE). Over the past few years, the company developed into a growth darling thanks to its strong track record in renewable energy development and tailwinds from the global energy transition and incentives in the Inflation Reduction Act. The problem for NextEra, and the transition broadly, is that this transformation is immensely capital intensive and many renewables projects offer lower returns on that capital. This requires high capital expenditures – often resulting in negative free cash flow – to meet the growth and financing needs of companies like NextEra. To help, the company leaned on financial engineering by using a publicly traded limited partnership called NextEra Energy Partners, providing further capacity for its parent to continue its development plans. NEP used layers of its own financial engineering to fund its own negative free cash flow and a large, growing dividend yield that we believe it could not sustain organically. Ultimately, the higher cost of debt from rising rates led NEP to lower its own growth ambitions, driving concerns about whether NextEra can execute on its extensive backlog. As a result, the stock has declined by approximately 30% year to date.”
3. Medtronic PLC (NYSE:MDT)
Number of Hedge Fund Investors: 59
Medical device company Medtronic PLC (NYSE:MDT) shares have gained about 6.8% over the past one year. Morgan Stanley said in its December 2023 report that there’s a 20% upside to base case for the stock in 2024.
As of the end of the third quarter of 2023, 59 hedge funds tracked by Insider Monkey had stakes in Medtronic PLC (NYSE:MDT). The most notable hedge fund stakeholder of Medtronic PLC (NYSE:MDT) was Jean-Marie Eveillard’s First Eagle Investment Management which owns a $477 million stake in Medtronic PLC (NYSE:MDT).
2. Intel Corp. (NASDAQ:INTC)
Number of Hedge Fund Investors: 70
Morgan Stanley in December said Intel Corp. (NASDAQ:INTC) has a 4% upside to bull case in 2024. Earlier this month, Wedbush Securities counted Intel Corp. (NASDAQ:INTC) among the stocks it believes are poised to grow amid higher PC demand. Wedbush’s analyst Matt Bryson increased his price target on Intel Corp. (NASDAQ:INTC) shares to $45 from $35.
Bryson said a replacement of PCs cycle is coming as users prepare to buy new computers to replace the ones they bought during the pandemic days.
Upslope Capital Management stated the following regarding Intel Corporation (NASDAQ:INTC) in its fourth quarter 2023 investor letter:
“Intel Corporation (NASDAQ:INTC) – New Long: This is not a traditional long for Upslope in any sense. Intel is outside of the box in terms of typical sector and market cap focus, and the position is really a portfolio hedge (and structured as such). The thesis is very simple: Intel is uniquely positioned to benefit in two important scenarios, both of which require “protection” for Upslope’s portfolio: a continued melt-up in technology stocks and/or rising tensions over Taiwan. Combined with expectations and sentiment around Intel that were incredibly low, this nudged me to add exposure via long-dated INTC call options. While still material in terms of delta-adjusted exposure, the position has been reduced repeatedly and is much more modest today.”
1. Walt Disney Co (NYSE:DIS)
Number of Hedge Fund Investors: 89
Walt Disney Co (NYSE:DIS) ranks first in our list of the top stocks Morgan Stanley recommended for 2024. The analyst firm said the stock has a 17% upside to its base case. Goldman Sachs recently listed Walt Disney Co (NYSE:DIS) among its top return on equity growth stocks.
As of the end of the third quarter of 2023, 89 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Walt Disney Co (NYSE:DIS). The biggest stakeholder of the media company is Nelson Peltz’s Trian Partners which owns a $2.6 billion stake in Walt Disney Co (NYSE:DIS). Peltz is currently engaged in a proxy battle with Disney and recently said in an interview that Walt Disney Co’s (NYSE:DIS) board oversight is “awful.”
Madison Sustainable Equity Fund made the following comment about The Walt Disney Company (NYSE:DIS) in its Q3 2023 investor letter:
“During the quarter, we sold our positions in Bristol-Myers Squibb and The Walt Disney Company (NYSE:DIS). The Walt Disney Company is facing a difficult and uncertain transition in its core media business assets including the ESPN business and other linear media assets. These media assets are cash generative but face secular decline as consumers are cutting their expensive cable subscriptions and moving to alternative streaming options. This has resulted in a decline in operating profits for the media division. The media business has long-term fixed costs related to its sports broadcasting agreement with multiple sports leagues which will further pressure profits during this transition.”
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