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Investor Sarat Sethi shared his stock picks to position for a higher-for-longer interest rate environment. The managing partner at Douglas C. Lane & Associates named Morgan Stanley as his bank pick, saying that the firm’s core wealth management business will do well in the current rate environment. “If you look at kind of where they are compared to their peers, we feel that’s kind of the right business you want to be,” Sethi said Thursday on CNBC’s “Squawk Box.” Notably, Morgan Stanley last month said Ted Pick will succeed James Gorman as CEO at the start of 2024, a development Sethi said takes away uncertainty around the company. What’s more, the stock has a more than 4% dividend yield. Additionally, Sethi favors Uber Technologies over Lyft , saying the former’s “capital allocation has been fabulous.” The managing director said he favors Uber Technologies’ positive cash flow , which it reached for the first time this year, as well as its brand and international footprint. “That’s what these stocks need to do,” Sethi said. “In an environment where rates are where they are, you’re not getting a free call option for just growth without any cash flow.” Uber on Tuesday missed expectations on the top and bottom lines but topped its guidance for gross bookings. Meanwhile, Lyft shares fell Thursday after reporting third-quarter bookings that disappointed expectations. Lastly, Sethi said he favors Charter Communications as the company invests in its business. “They’re spending money now for the future,” Sethi said. “The market hates this at this point, but if you get great capital allocation story success, seven times forward cash flow, it hasn’t been this cheap in over a decade.”
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