Earnings season is kicking into high gear, and Morgan Stanley named a few stocks to buy ahead of results. The firm said this week that several companies slated to report soon are offering an attractive entry point. CNBC Pro combed through top Morgan Stanley research to find overweight-rated stocks ahead of earnings. They include Apple , Colgate-Palmolive, Datadog, Spotify Technology and Nu Holdings. Colgate-Palmolive There’s no shortage of positive catalysts ahead for top pick Colgate-Palmolive, according to analyst Dara Mohsenian. The consumer products company is scheduled to report second-quarter earnings on July 26 . Mohsenian said Colgate-Palmolive seemingly has it all, from pricing power to share gains. The stock is up 23% in 2024, but it has plenty of room to run, according to the analyst. “Corporate visibility is also high given recent strong balance in CL’s results, which gives us more confidence in sustainability, as well as CL’s greater defensiveness than peers,” he wrote. Further, Mohsenian said tailwinds abound for Colgate’s pet business, which is underappreciated by investors. The company owns Hill’s Pet Nutrition. “However, more so than just Q2 where the bar is already high, our enthusiasm for the stock comes from increasing visibility that CL’s LT [long term] structural advantage is building vs peers, which should continue in H2 and beyond,” he said. Apple Analyst Erik Woodring elevated the tech giant to top pick status earlier this week. He said Apple Intelligence , the company’s take on generative artificial intelligence, is well positioned to be a key catalyst in the months ahead as the iPad and iPhone cycle ramp up. “Apple Intelligence is set to drive record device upgrades,” the analyst wrote. Woodring went so far as to say that investors have underappreciated this powerful tailwind for Apple. “However, what we had previously underestimated, and what the market still underappreciates today, is just how material the impending upgrade cycle can be,” he said. “Apple Intelligence is a clear catalyst to boost iPhone and iPad shipments, and our deep dive into the iPhone installed base, upgrade rates, and mix shift now points a record cycle ahead,” he added Apple is scheduled to report its fiscal third-quarter results on Aug. 1 . Shares are up 16.5% in 2024. Datadog Shares of the cloud-scale applications software company are down nearly 2% this year, but analyst Sanjit Singh said the dip is worth buying ahead of quarterly results. The company is set to report on Aug. 8 . Singh acknowledged that the stock’s valuation has been less attractive as of late, with shares down 8% in July alone. Nevertheless, the analyst is sticking with his overweight rating for the long term — and he advised investors to do the same. “Our intra-quarter conversations suggest that DDOG is executing well in a tight spend environment which we see as translating to sustained growth,” he said. In addition, Singh sees margin upside potential along with a slew of new products in the company’s pipeline. “Datadog continues to be positioned as the best house in a tough infrastructure software neighborhood,” he added. Colgate-Palmolive “Corporate visibility is also high given recent strong balance in CL’s results, which gives us more confidence in sustainability, as well as CL’s greater defensiveness than peers. … However, more so than just Q2 where the bar is already high, our enthusiasm for the stock comes from increasing visibility that CL’s LT [long term] structural advantage is building vs peers, which should continue in H2 and beyond.” Apple “Apple Intelligence is a clear catalyst to boost iPhone and iPad shipments, and our deep dive into the iPhone installed base, upgrade rates, and mix shift now points a record cycle ahead … Apple Intelligence is set to drive record device upgrades. … However, what we had previously underestimated, and what the market still underappreciates today, is just how material the impending upgrade cycle can be.” Datadog “Our intra-quarter conversations suggest that DDOG is executing well in a tight spend environment which we see as translating to sustained growth. … While NT risk-reward screens less compelling, we see a LT share gain opportunity that should deliver sustained growth and attractive margins. … Datadog continues to be positioned as the best house in a tough infrastructure software neighborhood.” Spotify Technology “We raise estimates to incorporate the earlier and larger than expected US price increases and the higher than expected incremental margins on these increases. Our OW thesis remains Spotify’s 1) long runway ahead for user growth, 2) leading product position, and 3) underappreciated earnings power.” Nu Holdings “We came away from our meeting with even more confidence in our bullish view — Nubank could reach US$100 billion valuation by 2026. The payroll loan book in Brazil is poised to accelerate meaningfully later this year, the Mexico story seems to be progressing nicely, and the Open Finance agenda — if executed well — can allow for even faster market share gains at NU. At the same time, consensus is still underestimating the opportunity ahead, in our opinion.”
