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

Morgan Stanley highlights Nvidia, Nubank, Sallie Mae, Seagate, and Coupang as top overweight-rated picks for June, citing specific catalysts for each. Seagate is seen as an undervalued play on data growth with strong financials, while Coupang benefits from market share gains and a weaker USD. Nubank's ability to scale profitably in Brazil is underestimated, and Nvidia is exceeding expectations. Sallie Mae is exploring alternatives to whole loan sales.

Analysis

Morgan Stanley has identified several overweight-rated companies as top picks for June, signaling continued upside potential and highlighting specific catalysts for growth. For Seagate Technology (STX), the firm underscores its position as an underappreciated play on the exponential growth in data storage demand, driven by an inflection in compute. Seagate is reportedly trading at 7.5x Morgan Stanley's peak EPS estimate, and its stock, already up 36% year-to-date, is anticipated to benefit from tech leadership, premium margins, robust free cash flow generation, and strong capital returns, supporting a price target increase to $140. South Korean e-commerce leader Coupang (CPNG) was named a new top pick, with its price target elevated to $32 from $27, reflecting sustained market share gains despite competitor actions. Coupang's strong execution, relative insulation from tariff risks, and advantages from a weaker U.S. dollar contribute to its compelling outlook, with shares having risen 27% this year and valuations considered favorable against peers. In the fintech sector, Nubank (NU) is recognized for its significant, yet purportedly underestimated, potential to scale profitably in Brazil through deeper cross-selling, demonstrably outpacing peers in securing primary banking relationships and consumer credit intent; its stock has appreciated nearly 16% year-to-date. Nvidia (NVDA) continues as a top pick in semiconductors, with Morgan Stanley asserting that concerns about business digestion are unfounded, as growth drivers appear durable and acceleration is evident beyond China-related headwinds. Lastly, Sallie Mae (SLM) remains a top pick, with potential for multiple expansion through strategic alternatives to whole loan sales, such as joint ventures, aimed at fostering more consistent asset-light cash flow.

Key Decisions for Investors

• Investors should evaluate opportunities in Seagate (STX) given its exposure to the data storage growth theme and attractive valuation metrics highlighted by Morgan Stanley, alongside Coupang (CPNG) for its persistent market share expansion and favorable operating conditions including currency benefits.
• Consider the ongoing growth narrative for Nubank (NU), particularly its ability to profitably scale in the Brazilian market, and Nvidia (NVDA), which Morgan Stanley sees as overcoming headwinds with a durable growth trajectory in the semiconductor space.
• Monitor Sallie Mae (SLM) for strategic developments regarding its exploration of alternatives to whole loan sales, such as joint ventures, which could enhance its cash flow consistency and potentially lead to a valuation re-rating.
• Given Morgan Stanley's strong conviction and identified catalysts, these selected overweight-rated stocks warrant consideration for portfolios seeking exposure to specific growth themes, while noting their respective year-to-date performances and outlook for continued upside.