Morgan Stanley says buy these five stocks that are set to rally

Morgan Stanley has identified five stocks as top picks with significant upside potential: Chart Industries, Ulta Beauty, Coupang, Chewy, and NuBank. The firm highlights Chart Industries' post-merger growth and defensive qualities, Ulta's undervalued position amid improving industry trends, and Coupang's competitive advantage in Korean e-commerce. Additionally, Chewy presents an underpriced opportunity in the vet clinic market, while NuBank is poised for substantial market share gains in Brazil's payroll loan segment, collectively offering compelling investment theses.

Analysis

Morgan Stanley has identified five overweight-rated stocks, each with a distinct, catalyst-driven investment thesis. For Chart Industries (GTLS), the recent merger agreement with Flowserve is seen as a pivotal event that accelerates strategic initiatives and offers significant deal-related upside, complementing what is already viewed as a compelling organic growth story. The stock, up 18% in the past year, is also positioned as a defensive holding. In the consumer space, Ulta Beauty (ULTA) is considered undervalued, with analysts believing its current guidance is conservative, setting a low bar for potential earnings beats in 2H25, supported by improving sector trends and minimal tariff risk. Similarly, Korean e-commerce leader Coupang (CPNG) is highlighted for its sustained market share gains, driven by a superior integrated fulfillment network, insulation from tariff risks, and benefits from a weaker US dollar; its valuation remains attractive despite a 40% stock increase in the past three months. Chewy (CHWY) presents a unique growth vector through its expansion into the $40 billion veterinary clinic market, which Morgan Stanley frames as an underpriced call option with a potential 2.5x to 5.0x return on investment per clinic. Finally, Nu Holdings (NU) offers a contrarian opportunity, with analysts forecasting it will capture a 10% market share in Brazil's payroll loan segment by 2026, substantially higher than the 3-4% consensus estimate.

Key Decisions for Investors

• Consider this list as a source of diverse, non-correlated growth opportunities spanning US industrials (GTLS), consumer discretionary (ULTA), pet care (CHWY), Korean e-commerce (CPNG), and Brazilian fintech (NU).
• The bull cases for Nu Holdings, Chart Industries, and Chewy are predicated on specific forward-looking catalysts, requiring investors to assess their conviction in payroll loan penetration, M&A synergies, and new vet clinic expansion, respectively.
• Given the significant recent stock appreciation in Coupang (+40%), Ulta (+22%), and Chart Industries (+18%), it is prudent to scrutinize valuations to confirm that the risk-reward profile remains compelling after the strong run-up.
• For portfolios seeking to de-risk from macro uncertainty, the specific theses for Coupang and Ulta (minimal tariff risk) and Chart Industries (defensive qualities) present potentially resilient investment attributes.