Morgan Stanley: 3 Surprising Stocks Set For Huge Growth

Morgan Stanley has just released a list of top ‘secular growth stocks’. These are stocks that Morgan Stanley analysts believe can outperform the market, regardless of the economic environment. “While our US Equity Strategy team has remained positive on an equity market they believe is ‘Classic Late Cycle,’ for some long-term investors, it may make sense to focus not on the cycle, but through the cycle,” the bank explains.

To find these special stocks, Morgan Stanley screened for stocks with revenue growth over the last 3 years. It then narrowed the list to stocks which had a 3-year compound-annual-growth-rate (CAGR) forecast of at least 15% for EPS and 10% for revenue. From this list, we delved into three of the most intriguing stock names.

Let’s take a closer look at these 3 top stock ideas now:

1. Tesla Inc. (Nasdaq: TSLA)

This controversial auto stock is one of Morgan Stanley’s top picks. Year-to-date, TSLA stock has soared by an impressive 51.99%. This makes it one of the best-performing stocks in the market this year. But now analysts are divided about whether Tesla can continue to post such big gains going forward. For example, five-star Nomura analyst Romit Shah says Tesla can reach $500- 51% upside from the current share price. He reiterated his buy rating on October 31.“We believe that Tesla, much like Intel in the 1990s, is well positioned to accrue most of the profits in the electric vehicle value chain” says Shah.

He adds that supply constraints for Tesla’s much-hyped Model 3 vehicle will be short-lived. Ultimately this means that: “We see significant momentum for alternative energy vehicles globally and expect Tesla’s Model 3 to lead the first stage of mass-market electric vehicle adoption.” In light of this, he believes Tesla sales will reach $58 billion in 2021, up from just $8 billion that Tesla saw last year.

Overall, the stock has a Hold analyst consensus rating, with an average analyst price target of $304. Given that the stock is currently trading at just $304, this translates into a downside from the current share price of -8%. Note that you can click on the graph below for a more detailed analysis of the stock.