
Rate Hike or No, Fifth Third and Microsoft Stock Will Jump, Says Morgan Stanley's Skelly
The bull market will not end even if the Federal Reservedoes hike rates in December -- and financial stocks like Fifth Third Bank (FITB) - Get Report will lead the way higher, said Daniel Skelly, head of equity model portfolio solutions at Morgan Stanley Wealth Management.
"We do think interest rates going higher will be a catalyst," said Skelly. "Secondly, Fifth Third has a new CEO -- they are consolidating some branches -- so we think we have some expenses to come out, some cost-cutting that can also drive earnings growth from here."
Fifth Third has seen its shares jump almost 5% in the past week, bringing it flat year to date. The company's new CEO, Greg Carmichael, assumed the top job on Nov. 1.
Skelly is also bullish on natural gas distributor Sempra Energy (SRE) - Get Report , which has seen its stock drop 10% year to date due to the persistent problems in the energy sector. He said he added the company's shares to his dividend portfolio following a pullback in late September because the company "has growth visibility in its contracted assets with limited commodity exposure."
"They have about 10% earnings growth, which is way higher than your average utility stock," said Skelly. "And we see the liquefied natural gas export opportunity as a strong long-term driver."
Finally, Skelly is a fan of Microsoft (MSFT) - Get Report , which has seen its shares rise over 16% so far this year after being rejuvenated under the leadership of CEO Satya Nadella. Skelly said Morgan Stanley's recent CIO survey results portend increased software investments over the next year and cited Microsoft, in particular, as a key share winner.
"Companies continue to invest in software and productivity related initiatives," said Skelly. "Microsoft actually screened very well in that survey work as a share-gainer."








