Morgan Stanley’s Top 10 Stock Picks for 2022

·9 min read

In this article, we will be taking a look at Morgan Stanley's top 10 stock picks for 2022. To skip our detailed analysis on Morgan Stanley's stock picks and their performance, you can go directly to see Morgan Stanley's Top 5 Stock Picks for 2022.

In the aftermath of the breakout of the coronavirus pandemic in 2019, the world has been plunged into a whirl of unknowns. The economy is no exception to this development, plunging into a recession caused by the pandemic, marked by market liquidity, high inflation, and strained labor markets. Subsequent to these developments, the year 2022 is now being dubbed by investors and financial institutions as the critical year of recovery, during which the pandemic-wrought economic imbalances will get resolved, and the business cycle will recover. Morgan Stanley is one such commenter, as evidenced by their 2022 outlook report.

While the bank does not promise a return to the pre-pandemic market, it has commented that the economic and market environment in 2022 will be reflationary and marked by higher economic growth than 2021, alongside higher inflation and higher real interest rates. In such a market, Morgan Stanley has recommended that investors should focus on "technology takers," or companies that are equipped to increase tech adoption.

The financial institution backed a number of big names in 2021, most of which performed exceptionally in the financial year. Capital One Financial Corporation (NYSE:COF) is one such company. The stock is up 40% in the last 12 months. It has also received a Buy rating from Barclays analyst Jason Goldberg in January.

A popular stock pick for Morgan Stanley in 2021 was Meta Platforms, Inc. (NASDAQ:FB), formerly Facebook. Last year, the firm commented that the metaverse was an $8 trillion addressable market. It added that the company's growth durability and strong free cash flow despite investing billions in social networking makes it an obvious stock pick. In the fiscal third quarter, the company's EPS was $3.22, beating estimates by $0.04.

Like JPMorgan Chase & Company (NYSE:JPM), The Coca-Cola Company (NYSE:KO), Amazon.com, Inc. (NASDAQ:AMZN), and Medtronic plc (NYSE:MDT), top stock picks by Morgan Stanley for 2022 worth a look.

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Image by Blomst from Pixabay

Our Methodology

We have used Morgan Stanley analyst opinions, reports, and finance opinion articles to pick stocks considered to be top performers by the financial organization. They are ranked on the basis of the number of hedge funds holding stakes in them, from the lowest to the highest. For hedge fund information, we have used Insider Monkey's hedge fund data for the third quarter of 2021, when 867 hedge funds were tracked.

Morgan Stanley's Top Stock Picks for 2022

10. Rivian Automotive, Inc. (NASDAQ:RIVN)

Number of Hedge Fund Holders: N/A

Rivian Automotive, Inc. (NASDAQ:RIVN) is a developer and manufacturer of electric adventure vehicles. The company offers five-passenger pickup trucks and sports utility vehicles to its customers, alongside electric SUVs and electric pickup vehicles. It has been reported that a team of Morgan Stanley analysts led by Adam Jonas ranked Rivian Automotive, Inc. (NASDAQ:RIVN) second on their list of favorite electric vehicle stocks for 2022, in a note released by the Autos and Shared Mobility team. It is thus among Morgan Stanley's top stock picks for 2022.

This January, Morgan Stanley's Adam Jonas also reiterated an Overweight rating on Rivian Automotive, Inc. (NASDAQ:RIVN) shares.

Comus Investment LLC, an investment management firm, mentioned Rivian Automotive, Inc. (NASDAQ:RIVN) in its fourth-quarter 2021 investor letter. Here's what they said:

“Thesis investing ties hand-in-hand with the concept of intrinsic value, the all-important but equally useless term which suggests investors can estimate what companies are worth, with these estimates frequently supported by data which don’t exist, or which are expected to appear in the future, and which often deviate substantially from that shown in the past or present. These estimates of intrinsic value can vary dramatically based on our inputs of growth and profitability, and they are all incorporated into the stock pricing we currently see. Rivian Automotive, Inc. (NASDAQ:RIVN), for example, with its $90 billion valuation and complete lack of any revenue (though it does have pre-orders), must incorporate the idea that this venture, which is currently smaller than your local coffee shop, will be wildly successful. People are clearly paying good money for it and have optimism about its future.”

9. FREYR Battery (NYSE:FREY)

Number of Hedge Fund Holders: 20

FREYR Battery (NYSE:FREY) is a company based in Norway, working on manufacturing battery cells with sustainable energy. The company ranked third on Morgan Stanley's favorite electric vehicle stock for 2022 list, courtesy of analyst Adam Jonas, making it one of Morgan Stanley's top stock picks for 2022 in the EV sector.

Adam Jonas from Morgan Stanley holds an Overweight rating on FREYR Battery (NYSE:FREY) shares as well, as of this January.

The EPS for FREYR Battery (NYSE:FREY) in the fiscal third quarter was -$0.42. It has gained 12.7% in the past six months.

Our hedge fund data shows 20 hedge funds holding stakes in FREYR Battery (NYSE:FREY) in the third quarter of 2021, with a total stake value of $378 million. The largest stakeholder for the quarter was Sylebra Capital Management, holding 12,419,240 shares worth over $122 million.

Like JPMorgan Chase & Company (NYSE:JPM), The Coca-Cola Company (NYSE:KO), Amazon.com, Inc. (NASDAQ:AMZN), and Medtronic plc (NYSE:MDT), FREYR Battery (NYSE:FREY) is a noteworthy stock to invest in this year.

8. Ferrari N.V. (NYSE:RACE)

Number of Hedge Fund Holders: 27

Like the two stocks above, Ferrari N.V. (NYSE:RACE) is among Morgan Stanley's top stock picks for 2022, ranking first on the Adam Jonas-led team's list of favorite EV stocks for 2022. The stock has replaced General Motors as Morgan Stanley's top pick this year. Ferrari N.V. (NYSE:RACE) itself designs, engineers, produces and sells luxury performance sports cars, and is a prospective big player in the EV sector.

Analyst Adam Jonas at Morgan Stanley holds an Overweight rating on Ferrari N.V. (NYSE:RACE) shares as well, as of January 2022.

The company's fiscal third quarter report shows an EPS of $1.29, beating estimates by $0.13. Its revenue of $1.22 billion was up 17.4% year over year. Ferrari N.V. (NYSE:RACE) has also gained 20.2% in the past six months.

For Ferrari N.V. (NYSE:RACE), our data shows 27 hedge funds long the stock in the third quarter. Their total stake value was $1.2 billion approximately, higher than the $992 million figure in the second quarter.

Ensemble Capital, an investment management firm, mentioned Ferrari N.V. (NYSE:RACE) in its second-quarter 2021 investor letter. Here's what they said:

Ferrari: After posting standout performance in 2020, beating the S&P 500 by over 20%, Ferrari’s share price performance has lagged for much of this year. The main issue this quarter was the company pushing out their medium-term financial targets due to development and production delays caused by COVID, but this only led to a 1% decline in the stock price for the full quarter. While we believe the company did a fantastic job maintaining production in light of COVID, it did not surprise us that some of their longer-term, new model introductions might be delayed by a couple of quarters. While disappointing of course, Ferrari N.V. (NYSE:RACE) is curating a set of extremely exclusive mechanical works of art and we are much happier seeing them take the time to do things right, rather than rushing to meet a self-imposed financial target.”

7. Northrop Grumman Corporation (NYSE:NOC)

Number of Hedge Fund Holders: 29

Northrop Grumman Corporation (NYSE:NOC) is an aerospace and defense company operating through its Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems segments. The company was dubbed as the "preferred Defense prime" for investors by Morgan Stanley analyst Kristine Liwag in December 2021. Liwag added that the stock was her preferred pick to "play the Great Power Competition theme in 2022," making it one of Morgan Stanley's top stock picks for 2022.

In December 2021, Liwag reiterated an Overweight rating on Northrop Grumman Corporation (NYSE:NOC) shares.

With an EPS of $6.63, beating estimates by $0.65, and a revenue of $8.72 billion, Northrop Grumman Corporation (NYSE:NOC) exceeded expectations in the fiscal third quarter of 2021.

Out of the 29 hedge funds holding shares in the company in the third quarter, Yacktman Asset Management was the largest stakeholder. The fund held 437,931 shares in Northrop Grumman Corporation (NYSE:NOC), worth about $157 million.

Like JPMorgan Chase & Company (NYSE:JPM), The Coca-Cola Company (NYSE:KO), Amazon.com, Inc. (NASDAQ:AMZN), and Medtronic plc (NYSE:MDT), Northrop Grumman Corporation (NYSE:NOC) is a stock investors are vying after today.

6. Lockheed Martin Corporation (NYSE:LMT)

Number of Hedge Fund Holders: 51

Lockheed Martin Corporation (NYSE:LMT) is a security and aerospace company, working on the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services. The company is among Morgan Stanley's top stock picks for 2022, with analyst Kristine Liwag backing its performance.

Liwag holds an Overweight rating on Lockheed Martin Corporation (NYSE:LMT) shares as of December 2021.

According to the company's fiscal third quarter earnings report, Lockheed Martin Corporation (NYSE:LMT) had an EPS of $6.93, beating estimates by $0.13.

Out of 867, 51 hedge funds were long Lockheed Martin Corporation (NYSE:LMT) in the third quarter of 2021, compared to 58 hedge funds in the previous quarter.

Vltava Fund, an investment management firm, mentioned Lockheed Martin Corporation (NYSE:LMT) in its fourth-quarter 2021 investor letter. Here's what they said:

“Of course, not all of our companies are doing better than we expected. Lockheed Martin fell somewhat short of our expectations last year. In the cases of Lockheed Martin Corporation (NYSE:LMT) disruptions in the supply and logistics chains. Lockheed uses a great many subcontractors from various countries and could not avoid issues with continuity of supplies. As a result, production will be slightly lower than we had expected.”

Click to continue reading and see Morgan Stanley's Top 5 Stock Picks for 2022.

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Disclosure: None. Morgan Stanley's Top 10 Stock Picks for 2022 is originally published on Insider Monkey.

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