NEW YORK (TheStreet) -- Navigating the world of equities can be troublesome when investors have to consider oil prices, currency swings, Fed policy translations, geopolitics and other factors that are put into play. But there are plenty of U.S. companies that could be long-term picks, despite these macro factors.
Morgan Stanley analysts identified "high-quality companies likely to strengthen and extend a sustainable competitive advantage," resulting in a "30 for 2018" list. The analysts put forth their best investment ideas "in their sectors at times of market dislocations or uncertainty." The stocks are considered suitable for holding for a three-year time period, according to the report, issued Thursday.
"Our driving principle was to create a list of companies whose business models and market positions would be increasingly differentiated by 2016," the report said.
"The main criterion is sustainability -- of competitive advantage, business model, pricing power, cost efficiency, and growth. We selected the companies that scored best on these criteria," the report said. The analysts also took into account capital structure, shareholder remuneration, as well as environmental, social and governance principles, which can "shed light on a management team's approach to sustainable and responsible governance over the very long term."
Here are Morgan Stanley's top picks for the health care and pharmaceuticals industries stocks. We paired Morgan Stanley's views with ratings from TheStreet Ratings for comparison.
TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 (SPY) stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014, beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 (IWM) stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
Note: Year-to-date returns are based on May 15, 2015, closing prices.