BOSTON ( TheStreet) -- Best Ideas, stock picks that Morgan Stanley (MS) says have the most favorable risk-reward profiles, is now just over a year old.
Last year's selections fared well. Though not recommended as a portfolio, several of the Best Ideas stocks delivered solid gains since publication in October 2009. Here's a closer look at the recommendations and their performances.
has gained 17% since Oct. 1, 2009.
has risen 30%.
Bank of America
has fallen 30%.
has increased 0.1%.
has climbed 37%.
has dropped 9%.
has advanced 4.6%.
has appreciated 30%.
(UNP - Get Report)
has soared 58%.
has increased 36%.
In sum, five of the original nine picks have outperformed the S&P 500. Here is a look at Morgan Stanley's eight Best Ideas heading into 2011.
Below, the stocks are ordered by their predicted upside, from modest to mammoth.
(BWA - Get Report)
manufactures and sells engineered automotive systems.
: BorgWarner's 12-month sales have soared 44%. Third-quarter profit quintupled to $107 million, or 87 cents a share, as revenue grew 37% to $1.4 billion. The operating margin widened from 2.5% to 8.7%. BorgWarner has $432 million of cash and $1.3 billion of debt, equal to a quick ratio of 1.1 and a debt-to-equity ratio of 0.5. Management is forecasting $2.3 billion of net new powertrain business between 2011 and 2013.
: The stock trades at a trailing earnings multiple of 25, a forward earnings multiple of 18, a book value multiple of 3.4 and a cash flow multiple of 17, 28%, 46%, 76% and 41% discounts to auto components peer averages. Its PEG ratio, a measure of value relative to growth, of 0.1 reflects a 90% discount to estimated fair value. Morgan Stanley's bullish scenario entails a 51% stock-price rise to $100. Its bear-case target is $45.