PTON - Morgan Stanley selects top consumer stocks in recessionary scenario

As consumers come under a myriad of pressures, Morgan Stanley has pinpointed stocks to focus on as spending habits shift. In a new research report co-authored by 22 analysts, the bank outlined the stocks best positioned to “weather a storm” based upon both historical and proprietary spending data. Overall, the bank warned clients about a greater pullback in consumer spending than is presently priced in, with a risk to high-end consumers particularly underrated. “We believe investors need to consider the bear case for high-end consumer spending, where we forecast real GDP contracting in 3Q and 4Q, with consumption leading the contraction in economic activity,” the report reads. “This could be driven by any combination of a prolonged impact from inflation, weaker home prices, and/or a more pronounced slowdown in high-income jobs.” Despite recent drawdowns among consumer-facing stocks, the magnitude of these risks are still not fully realized, per the analysis.

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Morgan Stanley selects top consumer stocks in recessionary scenario