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Morgan Stanley’s Top 4 Internet Stocks for 2017

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Performance of the equity market

Since 2017 began, we’ve seen that the market (SPY) (QQQ) is mainly driven by optimistic sentiment for the US economy (IWM) (IVV) and a business-friendly sentiment led by the Trump administration.

However, March saw the failure of President Trump’s efforts to pass the American Health Care Act in the House of Representatives. Since April began, major US indexes such as the S&P 500 Index (SPX-INDEX), the NASDAQ Composite Index (COMP-INDEX), and the Dow Jones Industrial Average (DJIA-INDEX) (DIA) have gone nowhere. These indexes returned -1.4%, 0.1%, and -2.1%, respectively, in March 2017.

After the exit polls of the first round of France’s presidential election were released on April 23, we saw some positive movement in various indexes on April 24, 2017. It seems that the election outcomes met market expectations.

Trump and his cabinet members have been speaking about a proposed tax restructure program. They believe they are close to a significant tax restructuring program, which could also drive investment sentiment. These events, coupled with earnings growth, should impact market performance.

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Morgan Stanley’s Internet stock picks

In this environment, Morgan Stanley (MS) recommends four Internet stocks—Alphabet (GOOGL), Facebook (FB), Priceline (PCLN), and GrubHub (GRUB)—that it believes could outperform for the rest of the year. The investment firm wrote in a client note, “We continue to focus on revisions and areas where the market’s ‘narrative’ can change.”

In the next part of this series, we’ll analyze Morgan Stanley’s view on Google.

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