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TheStreet Open House

Morgan Stanley's 50 Stock Picks for 2015 -- Yes, 2015

BOSTON ( TheStreet) -- Dozens of investment banks large and small, from Goldman Sachs to Raymond James, are rattling off their favorite stock picks for the coming year. Morgan Stanley is going long -- to 2015.

The New York-based bank's analysts collected their 50 best stock ideas for three years from now, revisiting an idea the firm originally tried after the market meltdown in late 2008 and early 2009. Morgan Stanley identified companies that it said were likely to extend their competitive advantages, with stocks such as retailer Target (TGT) and chipmaker Qualcomm (QCOM) making the cut.

The companies are "likely to emerge with an even more powerful edge when markets and economies stabilize," the analysts wrote in a 72-page research report released Thursday.

For investors, looking beyond 2012 makes sense. After all, the Federal Reserve has already said it will keep interest rates low through June 2013 because of the sluggish economy. Even economists are ratcheting down their growth expectations for countries around the world. Using this list of stocks for 2015, investors could think longer term and feel less threatened by more immediate market events, including a potential sovereign default in the eurozone.

The Morgan Stanley analysts said they focused more on sustainability and the best franchises, not necessarily the most undervalued stocks. The bank said the 50 companies have business models and market positions that would be increasingly differentiated from their competitors by 2015.

Of the 50, 14 make Morgan Stanley's Best Ideas List, a collection of the most attractive stocks in terms of risk-to-reward profile. I've included a graphic of the 36 stocks that Morgan Stanley has picked for 2015, below, and I dove deeper into the 14 stocks that are also on the Best Ideas List.






14. Life Healthcare Group (LTGHF.PK)

Company Profile: Life Healthcare Group is the operator of 63 hospitals in South Africa.

Share Price: 20.40 South African rands (Dec. 15)

Potential Upside: 9% based on a price target of 22.3 South African rands

Morgan Stanley's View: Analyst Andrew Olanow says Life Healthcare is a play on solid underlying defensive growth. The company's high margins still have room for upside, Olanow writes, and that valuation looks reasonable.

"With any price regulations by the South African government for private hospitals delayed until 2014, we see added price pressure as unlikely before 2015," Olanow writes. He adds that the company's excess cash should drive a high dividend yield.

Olanow's base case view is for a 9% increase over the next 12 months. However, his most bullish scenario is that the stock will rise 33% over the next year, while his most bearish view is for a 28% slide in 2012.

The chart below shows shares of Life Healthcare that trade on the Pink Sheets in the U.S., but Morgan Stanley is recommending buying shares on overseas exchanges.

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