A slate of stocks — including a couple of notable winners — still have plenty more room to run this summer, according to Morgan Stanley. Even Nvidia, which has more than doubled in 2024, has additional upside, and it’s not the only company with solid growth prospects, the firm found. CNBC Pro combed through Morgan Stanley’s research to find overweight-rated stocks that the firm says are best positioned for the long haul. They include Dell Technologies, Hasbro, Nvidia, Progressive , Bath & Body Works and Warner Music Group . Hasbro Shares of Hasbro, one of Morgan Stanley’s top picks, are down more than 6% in the past month, but investors should buy the dip, analyst Megan Alexander said. Simply put, “toy demand is bottoming,” which is a major positive catalyst, she said. “Moreover, we believe toys should be relatively resilient compared to other discretionary categories amidst a more challenging macro backdrop,” she wrote. Further, Alexander said she’s starting to sees signs that market share declines are over. Hasbro’s Monopoly Go for Android and Apple devices “remains a source of upside,” according to the firm. Meanwhile, Hasbro is coming off a blowout first-quarter earnings report last month, which Alexander said likely signals additional upside. “We see the multiple expanding as investors gain confidence that management can deliver improving growth and reduce debt,” she said. Shares are up nearly 19% in 2024. Progressive The auto insurer is firing on all cylinders. Analyst Bob Jian Huang named Progressive a new top pick at the firm earlier this week. “Progressive is not expensive,” he said of the stock, which is up 28% this year. “Looking at P/E [price/earnings] and growth adjusted metrics, we see the company as attractively valued when compared to more popular stocks on the market today,” he added. In addition, revenue growth and margin expansion remain compelling, according to Huang. “We believe the company is well positioned for further growth in 2024 and 2025,” he said. Huang acknowledged investors’ concerns that the stock remains expensive, but he said those worries are overdone. “Despite near all-time high, valuation remains attractive, especially when compared to more well known stocks,” he wrote. Warner Music Group Analyst Benjamin Swinburne recently resumed coverage of Warner Music Group with an overweight rating and called the stock a top pick. “In the past 18 months, the music industry has seen significant positive developments,” he wrote. Simply put, the analyst thinks music companies like Warner have pricing power and offer dependable streaming revenue. Labels like Warner are also focused on creating new opportunities to take advantage of the evolution in artificial intelligence, according to Swinburne. “Price increases and the adoption of artist-centric models directly increase the value of music and music labels,” he added. Finally, Swinburne said Warner Music shares remain severely undervalued. The stock is down nearly 15% this year, but it’s just too attractive to ignore, he added. “WMG shares, however, have been left behind, creating a uniquely attractive opportunity,” Swinburne said. Bath & Body Works “Move BBWI to Top Pick, & PT to $56. Our analysis suggests BBWI’s home fragrance business potentially normalized back to pre-Covid trend as of ’23 year-end. With this reversion possibly in the rearview, we think BBWI can return to topline growth this year, & potentially earlier than mgmt. & the market suspect.” Warner Music Group “In the past 18 months, the music industry has seen significant positive developments. Price increases and the adoption of artist-centric models directly increase the value of music and music labels. WMG shares, however, have been left behind, creating a uniquely attractive opportunity. … We believe music is under-monetized and at the beginning of a repricing cycle.” Hasbro “Reiterate OW and Move to Top Pick. … Toy demand is bottoming. … Moreover, we believe toys should be relatively resilient compared to other discretionary categories amidst a more challenging macro backdrop. … MonopolyGo! remains a source of upside. … We see the multiple expanding as investors gain confidence that management can deliver improving growth and reduce debt.” Nvidia “The company again beat by $2 bn and shows no sign of slowing down even during the product transition, highlighting several important growth drivers. Remain OW, PT to $1160. … Bottom line, we think the backdrop warrants AI exposure even amid extreme enthusiasm – and NVIDIA remains the clearest way to get that exposure.” Progressive “Despite near all-time high, valuation remains attractive, especially when compared to more well known stocks. … Progressive is not expensive. … Looking at P/E [price/earnings] and growth adjusted metrics, we see the company as attractively valued when compared to more popular stocks on the market today. … Based on our earlier work on growth, we believe the company is well positioned for further growth in 2024 and 2025.” Dell “And looking forward, we see an attractive catalyst path, and several factors that can drive upside to valuation and earnings, including, the turning of the hardware cycle, accelerating capital returns, S & P 500 inclusion, 4) best-in-class cost management, and perhaps most importantly, 5) an emerging Gen AI story, as DELL capitalizes on rapidly accelerating AI Server demand, with a long runway for growth ahead.”
