Morgan Stanley just added these 3 safe stocks to their “buy” list, with the market expected to remain choppy

• Morgan Stanley has added three new high-quality defensive stocks to its “Fresh Money Buy List.”

• These names could help investors hedge against macroeconomic uncertainty as markets wait for fresh growth data.

• The firm expects minimal upside for the S&P 500 through the end of the year and instead sees trading in ranges.

Morgan Stanley has expanded its recommended stock list with three high-quality stocks as the bank moves to defensive positioning.

These names could help hedge against ongoing macroeconomic uncertainty, which Morgan Stanley doesn’t expect to resolve anytime soon.

Instead, analysts expect the S&P 500 to trade between 5,000 and 5,400 in the coming months.

The note argues that stocks are already priced to perfection, and valuations are elevated amid increasingly uncertain US growth. Therefore, volatility will continue until markets see new evidence that growth can keep pace or until the Federal Reserve enacts a satisfactory policy response.

“As a result, we continue to recommend more defensive stocks in sectors such as utilities, healthcare, consumer staples and parts of real estate, which tend to outperform quality growth when growth is the main concern,” Wilson wrote.

(1) Public Service Enterprise Group

Morgan Stanley said the utility firm offers investors a high return on equity and an above-average growth opportunity.

Operating under the symbol PEG, the company is a premium regulated energy firm that enjoys a stable business, the bank said. It is engaged in the transportation of electricity and natural gas.

So far this year, the company has risen 30.93% to $79.83, reaching a market capitalization of $39.78 billion.

Morgan Stanley has an overweight rating on the company with a price target of $78 per share.

(2) Abbey

The bank added ABBV to its list as a way for investors to gain exposure to the healthcare sector.

The large-cap name is a pharmaceutical company with an increasingly diversified drug book, Morgan Stanley said, helping it beat average revenue and earnings-per-share growth.

Separate research by the bank found that investors should look to biotech exposure to outperform stocks during the first rate cut. This corner of the market performs relatively well when rates are both up and down, the note added.

Abbvie is up 22.43% year to date, hitting a high of $189.7. Its market capitalization is $335.48 billion.

Morgan Stanley has an overweight rating on the company with a price target of $211 per share. This indicates that Abbvie has 11.2% more to earn from current levels.

The story continues

(3) Northrop Grumman

NOC, the defense and aerospace company, has joined Morgan Stanley’s list as a premium stock for industrials exposure.

The firm has not kept pace with its sector peers over the past year and is up just 6.6% to $498.32 per share. The company’s market capitalization is $72.29 billion.

However, analysts see it as an undervalued player that will benefit from long-term visibility and stability. Northrop’s recent earnings have already boosted confidence, with earnings per share topping previous estimates.

The bank has an overweight rating on the company, with a price target of $592 per share. That indicates 18.7% advance.

Morgan Stanley’s fresh money buy list now numbers 10 firms; other names included are Coca-Cola, McDonald’s, Verizon and Walmart. The current total list return since inclusion has averaged an equal weight of 16.95%.

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