‘30 for 2023’ – High-quality U.S. stock picks from Morgan Stanley

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Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

Morgan Housel from Collaborative Fund wrote the best investing-related sentence of 2021 so far in a column publuished Thursday,

“A good summary of investing history is that stocks pay a fortune in the long run but seek punitive damages when you demand to be paid sooner.”

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The whole piece is great, and it includes an interesting Warren Buffett anecdote.

“Too Much, Too Soon, Too Fast” – Collaborative Fund

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The Morgan Stanley equity research team helpfully provided “30 for 2023,” a list of stocks they believe are both high quality and best suited for long term investors,

” ’30 for 2023′ identifies our best long-term picks based on sustainability and quality of business model … Our strategists’ work has long supported the view that quality outperforms in the long run. Accordingly, we asked each of our US analysts to identify the highest-quality companies in their sector, the ones likely to strengthen their sustainable competitive advantage … The main criterion is sustainability — of competitive advantage, business model, pricing power, cost efficiency, and growth”

The stocks, in alphabetical order, are Alphabet Inc. , Amazon.com Inc., Amphenol Corp., Ball Corp., The Blackstone Group, Burlington Stores Inc. , CDW Corp., Costco Wholesale Corp., Dollar General Corp., EPAM Systems Inc., Estee Lauder Co., Ferrari NV, First Republic Bank, Invitation Homes Inc., Mastercard Inc. A, McKesson Corp., Microsoft Co. , Netflix Inc. , Nike Inc. B, Nuance Communications Inc., Progressive Corp., Prologis Inc. , S&P Global , Sherwin-Williams Co., Thermo Fisher Scientific Inc. , Trane Technologies PLC, UnitedHealth Group , Visa Inc. , Warner Music Group Corp. and Waste Connections Inc.

“@SBarlow_ROB MS: 30 for 2023 – high quality stocks for longer term investors” – (list) Twitter

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S&P documented the abysmal performance of the average Canadian fund manager in a Thursday report,

“Although this volatile period offered ample opportunity for stock-pickers to shine, 88% of Canadian Equity funds underperformed their benchmark in 2020, in line with the 84% that did so over the past 10 years. This shortfall was widespread, as a majority of funds underperformed in five of the seven categories in 2020. Over the past decade, a majority of managers in every fund category lagged their benchmarks’

“@SBarlow_ROB S&P: “88% of Canadian Equity funds underperformed their benchmark in 2020” – (research excerpt, chart) Twitter

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Goldman Sachs U.S. equity strategist David Kostin is recommending stocks with high operating leverage – the ability to turn sales increases into operating income – which outperform as revenue expectations climb.

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The total list of stocks is too long to post here. Notable names with the biggest leverage include Twitter Inc., Walt Disney Co., PVH Corp., Sysco Corp., Zimmer Biomet Holdings, Dentsply Sirona , Raytheon Technologies , General Electric Co., salesforce.com Inc., and DXC Technology.

” @SBarlow_ROB Kostin: “High operating leverage firms typically outperform when sales expectations rise “” – (Full table) Twitter

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Diversion: “Amazon’s $10 billion NFL deal is huge — and a sign that sports is staying on TV for a while longer” – Vox

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