Morgan Stanley says buy these quality growth stocks amid toppy market
Andrew Wilson, Managing Director of Electronic Arts Inc. (EA), speaks at the company’s EA Play event ahead of the E3 Electronic Entertainment Expo in Los Angeles, California, United States on Saturday, June 10, 2017 .
Patrick T. Fallon | Bloomberg | Getty Images
Investors should be prepared for some disappointment over the next 12 months as additional profit margins soar to unsustainable highs due to supply constraints and the looming corporate tax hike, according to Morgan Stanley. Investors should buy quality stocks with growth characteristics to combat this difficult market environment, the bank said.
The market downgraded as stock prices have not budged following the companies’ first quarter results, which came in a record quarter for stimulus in monetary and fiscal policy, Morgan Stanley said in a statement. note to investors Tuesday. De-rating refers to the decline in market valuation. The bank expects this process to be far from over and that the market has yet to see another 15% drop in price-to-earnings ratios, she said. This means that stock prices are likely to fall.
While higher profits over the past year have been “definitely a good thing,” they are “known and known” at this point and are no longer a surprise, “Morgan Stanley said in a note to investors Tuesday. “Consensus forecasts are now based on what appear to be unrealistic margin assumptions.”