Morgan Stanley's preference for defensive quality stocks has only increased since June, even as major U.S. indexes have continued to reach new highs.
"After a substantial rise in volatility the past two weeks, markets (and investors) are looking for direction. Our view remains that growth is now the primary concern for equity investors, rather than inflation and rates," Michael Wilson, the firm's chief U.S.
equity strategist, wrote in a Monday note to clients. He added that an economic soft landing is still his base case scenario. "We still think it makes sense to skew more defensively in one's portfolio as rates fall further," he said.
Wilson highlighted his stock screen of quality and defensive names, which are long ideas with overweight ratings from the firm's analysts that are also in the top 1,000 universe by market cap. From this screener, the analyst also added three names to his "Fresh Money Buy List": Public Service Enterprise Group , AbbVie and Northrop Grumman . Take a look at some of Morgan Stanley's favorite names below: AbbVie made the cut as one of the firm's top quality and defensive stocks.
The pharmaceutical company "is increasingly diversifying their drug pipeline and is able to deliver above industry average revenue and EPS growth," Wilson wrote in the note, adding that the firm's research suggests that biotech, more broadly, will see outperformance after the Federal Reserve's first interest rate cut. AbbVie, which has seen sales of its once-top-selling Hu.