According to Morgan Stanley, a set of stocks, including several noteworthy winners, still have plenty of upside this summer. Nvidia, whose shares have more than doubled in 2024, also has room to grow, proving it's not the only company with a solid growth outlook. CNBC Pro combed through Morgan Stanley's research to find the overweight-rated stocks that the firm believes are best positioned for the long term. These include Dell Technologies, Hasbro, Nvidia, Progressive, Bath & Body Works and Warner Music Group. Hasbro Shares of Hasbro, one of Morgan Stanley's top picks, have fallen more than 6% over the past month, but investors should buy on the dips, analyst Megan Alexander said. Simply put, “toy demand has bottomed,” which is a big positive, she said. “Furthermore, we believe toys should be relatively strong compared to other discretionary categories amid a tougher macro environment,” she wrote. Additionally, Alexander said the company is beginning to see signs that market share declines are over. Hasbro's Monopoly Go for Android and Apple devices “continues to be a source of upside,” according to the company. Meanwhile, Hasbro reported a big first-quarter earnings report last month, which Alexander said is likely a sign of further upside. “We see multiples expanding as investors gain confidence that management can deliver improved growth and reduce debt,” she said. The stock is up nearly 19% through 2024. Progressive Auto Insurance is doing well. Analyst Bob Jian Huang named Progressive his new top pick for the company this week. “Progressive is not overvalued,” he said of the stock, which is up 28% this year. “If you look at the P/E ratio, [price/earnings] “And from a growth-adjusted perspective, we see the company at an attractive valuation relative to more popular stocks in the market today,” he added. Moreover, revenue growth and margin expansion remain attractive, according to Huang. “We believe the company is well-positioned for further growth in 2024 and 2025,” he said. Huang acknowledged investors' concerns that the stock remains expensive, but said those concerns are overdone. “Despite being near all-time highs, valuation remains attractive, especially compared to better-known stocks,” he wrote. Warner Music Group analyst Benjamin Swinburne recently resumed coverage of Warner Music Group with an Overweight rating and called the stock his top pick. “The music industry has seen significant positive developments over the past 18 months,” he wrote. Simply put, the analyst believes music companies like Warner have pricing power and provide stable streaming revenue. Labels like Warner are also focused on creating new opportunities to take advantage of advances in artificial intelligence, according to Swinburne. “The combination of higher prices and the adoption of an artist-centric model directly increases the value of music and music labels,” he added. Finally, Swinburne said Warner Music shares remain significantly undervalued. Though the stock is down nearly 15% this year, it's too attractive to ignore, he added. “WMG shares, however, have been left behind, creating a uniquely attractive opportunity,” Swinburne said. Bath & Body Works “BBWI to Top Pick, PT to $56. Our analysis indicates BBWI's home fragrance business could return to pre-COVID trends as of year-end '23. We believe this reversal may be in the past and BBWI could return to top-line growth this year sooner than management or the market expects.” Warner Music Group “The music industry has seen significant positive developments over the past 18 months. Rising prices and the adoption of artist-centric models directly increase the value of music and music labels. However, WMG shares have been left behind, creating a uniquely attractive opportunity. … We believe music is under-monetized and at the beginning of a repricing cycle.” Hasbro “We reemphasize OW and move it to our top pick. … Demand for toys has bottomed. … Additionally, we believe toys are relatively resilient compared to other discretionary categories amid a more challenging macro environment. … Monopoly Go! continues to be a source of upside. …We see multiples expanding as investors become more confident that management can improve growth and reduce debt.” NVIDIA “The company is up $2B again, shows no signs of slowing even amid product transition, and highlights several key growth drivers. Remains OW, price target $1,160. … Ultimately, this backdrop justifies exposure to AI even in a very hot climate, and NVIDIA remains the clearest way to get that exposure.” Progressive “Despite being near all-time highs, valuation remains attractive, especially compared to better-known stocks. … Progressive is not expensive. … Looking at the P/E [price/earnings] Based on growth-adjusted metrics, we believe the company is attractively valued relative to the market's current favorites. … Based on our historical growth research, we believe the company is poised for further growth in 2024 and 2025. ” Dell “And looking ahead, we see an attractive catalyst path and several factors that could drive valuation and earnings, including a turning hardware cycle, accelerating returns on capital, inclusion in the S&P 500, 4) best-in-class cost management, and perhaps most importantly, 5) the rise of the AI generation. DELL is well placed to capitalize on rapidly accelerating demand for AI servers and drive future growth.”
