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.
12. Imperial Tobacco ( ITYBY.PK) Company Profile: Imperial Tobacco is an international tobacco company that produces a range of cigarettes, tobacco, rolling papers and cigars. Its brands include Davidoff, West and Gauloises Blondes. Share Price: 2,397 pounds (Dec. 15) Potential Upside: 14% based on a share price of 2,680 pounds Morgan Stanley's View: Analyst Toby McCullagh says the market is underestimating Imperial Tobacco's medium-term growth potential. "In addition to robust, reliable high single digit earnings growth, IMT has further capacity to surprise positively on cash returns, given leverage ratios that are comfortably in check, and perennially strong cash generation," McCullagh writes. "We see scope for upside surprises on the dividend and the buyback in the coming years." While McCullagh's base scenario calls for a 14% increase in share price over the next year, his most bullish view has shares rising 41% while his bearish view expects shares to drop 16%. The chart below shows shares of Imperial Tobacco that trade on the Pink Sheets in the U.S., but Morgan Stanley is recommending buying shares in London.
10. RenaissanceRe ( RNR) Company Profile: RenaissanceRe is a global provider of reinsurance and insurance, in particular for catastrophe and specialty reinsurance. Share Price: $71.81 (Dec. 15) Potential Upside: 19% based on price target of $87 Morgan Stanley's View: Analyst Gregory Locraft says RenaissanceRe has the highest rates in reinsurance, which is the fastest growing segment in property and casualty (P&C) insurance. "We expect rising property reinsurance pricing power and demand through 2012 and a broadening P&C cycle turn into 2013," Locraft writes. "We estimate the company has $600 million of excess capital to help accelerate organic growth in an improving marketplace." Locraft has a base case scenario that would see RenaissanceRe's shares climb 19% over the next 12 months. His most bullish scenario calls for a gain of 38% in 2012 while his most bearish view would have shares down 19% next year.
8. Teradata ( TDC) Company Profile: Teradata is a provider of enterprise technologies and services, including database warehousing and analytics. Share Price: $48.97 (Dec. 15) Potential Upside: 23% based on a price target of $65 Morgan Stanley's View: Analyst Katy Huberty says that Teradata's revenue growth is accelerating despite the economic uncertainty. She ties this on a significant increase in consultants, recent acquisitions by the company, and growth in spending on data analytics. "While Teradata's sweet spot is selling to Global 3,000 companies, where it has over one-third of the market, we see a longer-term opportunity for Teradata to expand into the mid-market given high demand for more affordable analytics appliances," Huberty writes. "The mid-market more than doubles Teradata's addressable market, in our view." Huberty's base case is for the stock to rise 23% next year, based on her price target. Her most bullish forecast, though, is for a 55% increase in share price over the next 12 months. Her most bearish scenario has shares down 17% in 2012.
6. Terumo ( TRUMY.PK) Company Profile: Terumo is a medical-devices maker that serves the areas of hollow-fiber technology, blood-management systems and endovascular therapy. Share Price: 3,755 yen (Dec. 15) Potential Upside: 26% based on a price target of 4,700 yen Morgan Stanley's View: Analyst Mayo Mita says the Japanese earthquake and tsunami was a setback for the company, Terumo has a more visible growth stage coming. "Over the next five years we see clear growth from China, the NOBORI drug eluting stent (DES), the U.S. catheter business, and the blood management business," Mita writes. The base-case Mita lays out is for a 26% rise in share price next year, although Mita's most bullish forecast has shares up twice that. On the downside, Mita's most bearish scenario has shares falling 11% in the next 12 months. The chart below shows shares of Terumo that trade on the Pink Sheets in the U.S., but Morgan Stanley is recommending buying shares in Tokyo.
4. BorgWarner ( BWA) Company Profile: BorgWarner is a supplier of car parts with a focus on the powertrain. Its customers include Ford ( F), General Motors ( GM), Toyota ( TM) and other automakers. Share Price: $62.93 (Dec. 15) Potential Upside: 27% based on a price target of $88 Morgan Stanley's View: Analyst Ravi Shanker says that BorgWarner is a powerful secular story for the next decade, never mind the next three years. "The market significantly underestimates the growth potential, especially in end-markets outside of light vehicle turbo," Shanker writes. "BorgWarner participates in end markets that are concentrated among few players, have high barriers to entry, and could see a skewed demand-supply equation for the next several years." Shanker's most bullish scenario would see BorgWarner shares climb 45% by the end of 2012, while his bearish scenario would see shares slip 28%.
2. PT Telekomunikasi ( TLK) Company Profile: PT Telekomunikasi is the largest telecom-services company in Indonesia, providing voice and Internet services to more than 125 million customers. Share Price: 7,250 Indonesian rupiahs (Dec. 15) Potential Upside: 36% based on a price target of 9,800 Indonesian rupiahs Morgan Stanley's View: Analyst Navin Killa is looking to Indonesia for opportunity with the pick of PT Telekom. "An improving pricing environment will lead to stock price recovery, we believe," Killa says. "Telkomsel is regaining market share. Historically, as Telkomsel has reduced the pricing gap with its peers, the incumbent has increased its market share." Killa's base target for PT Telekom calls for a 36% jump over the next 12 months after the stock fell 8% this year. However, Killa's most bullish call would see shares rise 56%, while the bearish scenario would see only a 9% increase in share price over the next year. The chart below shows the American Depositary Receipts of PT Telekom trading in the U.S., although Morgan Stanley recommends buying shares trading on overseas exchanges.