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  • Morgan Stanley’s equity analysts expect 2019 to be a year of consolidation for the stock market. 
  • They compiled a list of 25 stocks that should be able to grow their earnings independently of broader market weakness or an economic slowdown.

The stock market has reached a critical juncture that changes the game for investors, according to analysts at Morgan Stanley.

They expect the growth companies that have led gains for most of this bull market run to give way to value stocks. Also, they expect valuation metrics like price-to-earnings ratios to matter more than earnings growth in stock selection.

But don’t take this viewpoint as the death knell for companies with outsized growth. Morgan Stanley expects select stocks to continue growing their earnings — and, subsequently, their stock prices — even as the market consolidates. Additionally, these companies offer competitive advantages like market share gains and pricing power that should help them continue growing even if there is a slowdown in the global economy.

In a client note, they listed 25 of these North American companies that have been classified as growth companies for 48 straight months, and have generated positive revenue growth in each of the last 12 quarters. 

What’s more, only stocks they rated overweight or equal-weight made the cut.

That’s where Morgan Stanley’s work ends, however. The analysts cautioned that investors still need to study the specific risks and opportunitities attached to each company so they know the range of outcomes to expect. But they have high conviction that these 25 names will stand tall in the face of market adversity.

Here are the stocks:  

SEE ALSO: MORGAN STANLEY: The best group of stocks to own has shifted for the first time in years — here’s why it will be more permanent than most investors expect

1. Adobe

Ticker: ADBE

12-month performance: 41%

Comment: “Adobe is participating in a ~$108B total addressable market (TAM) with strong secular tailwinds around digital content creation, digital marketing,and eCommerce,” Keith Weiss said. 

“As Adobe integrates recent acquisitions of Marketo and Magento into an already rich product portfolio, we see the possibility for the company to widen its competitive moat. Together, we see these secular forces supporting both revenue and above-market EPS growth.”

Source: Morgan Stanley

2. Alphabet

Ticker: GOOGL

12-month performance: 5.5%

Comment: “As the dominant player in paid search, Google continues to benefit from secular growth as advertising dollars shift into digital,” Brian Nowak said. 

“Google also owns YouTube, the leader in online video advertising, an industry we believe will grow by nearly 25% from 2017 to 2020 to ~$22bn in the US alone.”

Source: Morgan Stanley

3. Amazon

Ticker: AMZN

12-month performance: 44%

Comment: “As the dominant player in US eCommerce, Amazon continues to experience secular growth as retail dollars shift online,” Nowak said.

“As Amazon scales its logistics network and expands its Prime membership program globally, we see a significant opportunity to capture a larger piece of the ~$1tn worldwide eCommerce market (ex China).”

Source: Morgan Stanley

See the rest of the story at Business Insider