High quality ‘SMID-cap’ stocks with cyclical exposure – MS
Contributor since / Followers
ipopba/iStock via Getty Images
Small-cap stocks offer “an excellent opportunity” for stock picking, according to Morgan Stanley analysts.
“For us to get outright bullish on small caps overall, leading macro indicators would likely need to show that a clear acceleration in growth is coming, and rates would likely need to remain contained,” said Michael Wilson, chief U.S. equity strategist and CIO for Morgan Stanley, in a note.
Analysts listed cyclical small cap stocks that are higher quality and have low adverse sensitivity to higher rates in case yields stay elevated or rise further during Trump’s second presidency.
This group, Wilson said, should benefit from a potential broadening trade from large to small caps.
The following stocks have an above median quality composite score compared to their sector peers and have a 12-month correlation with 10-year yields above -0.1.
Within communication services:
Within consumer discretionary:
- Macy’s (M)
- Nordstrom (JWN)
- Capri Holdings (CPRI)
- Global Business Travel Group (GBTG)
- Graham Holdings (GHC)
Within consumer staples:
- Spectrum Brands Holdings (SPB)
Within energy:
- Archrock (AROC)
- California Resources (CRC)
- Consol Energy (CEIX)
- Golar LNG (GLNG)
- Helmerich & Payne (HP)
- Liberty Energy (LBRT)
- Magnolia Oil and Gas (MGY)
- Murphy Oil (MUR)
- Oceaneering International (OII)
- Seadrill Limited (SDRL)
- SM Energy (SM)
Within financials:
- Bancorp Bank (TBBK)
- Texas Capital Bancshares (TCBI)
- UMB Financial (UMBF)
- Burford Capital (BUR)
- DigitalBridge Group (DBRG)
- Marqeta (MQ)
- SLM Corp. (SLM)
- Lincoln National (LNC)
- Oscar Health (OSCR)
Within health care:
- Evolent Health (EVH)
- Quidelortho (QDEL)
- Agios Pharmaceuticals (AGIO)
- Amneal Pharmaceuticals (AMRX)
- ImmunityBio (IBRX)
- Iovance Biotherapeutics (IOVA)
Within industrials:
- Griffon (GFF)
- MSC Industrial Direct (MSM)
- Sterling Infrastructure (STRL)
- Tecnoglass (TGLS)
- Trinity Industries (TRN)
- ABM Industries (ABM)
- SkyWest (SKYW)
- Werner Enterprises (WERN)
Within information technology:
Within materials: