Morgan Stanley fund manager picks 3 stocks to buy following Trump’s win

Tuesday at 11:20 PM

U.S. President-elect Donald Trump’s election win has sent shock waves through the stock market and left investors scrambling to work out which sectors — and stocks — are set to benefit. Aaron Dunn, portfolio manager at Morgan Stanley’s U.S. Value Fund , noted the “great deal of volatility” in markets following the election result, as markets reprice “what had been a 50/50 election.” Speaking to CNBC’s “Squawk Box Asia” on Tuesday, Dunn, who’s also co-head of value equity at Morgan Stanley, identified three stocks he is betting on following the election result. UnitedHealth Group UnitedHealth Group – which offers health insurance plans and services – is on Dunn’s list. The value investor noted that Medicare Advantage reimbursement rates had been “under pressure in the Biden Administration.” Reimbursement rates determine how much insurers can charge for monthly premiums and plan benefits. “So with Trump in now … that is being viewed very positively for managed care, because reimbursement rates are going to … be better,” Dunn explained. He also likes UnitedHealth’s earnings growth, and health insurance, prescriptions and health care services businesses. Year-to-date, its shares are up around 17%. “In our opinion, you’ve got a stock that’s become quite a bit cheaper … It’s a diversified play in this, [that] you’re getting it for just above the market multiple, with a solid runway of growth,” Dunn added. According to FactSet data, of 30 analysts covering the stock, 26 give it a buy or overweight rating. Analyst’ average price target is $626.44, which implies a potential upside of around 2%. Mid-America Apartment Communities Dunn’s pick to play the real estate sector in the U.S. is Mid-America Apartment Communities “[The] majority of real estate traded off immediately after the election (in-line with other rate-sensitive sectors). However, MAA offers a solution to the housing supply problem in the U.S,” he said. Year-to-date, however, shares in MAA are up 19%. Ten of the 25 analysts covering the stock give it a buy or overweight rating, according to FactSet data, while 13 have a hold rating and two have a sell call. The analysts’ average target price of $163.26 gives the stock 2% upside potential. NextEra Energy In the energy space, Dunn is betting on NextEra Energy , which — as the “largest global developer of renewable projects” — sold off following the election result. Trump has vowed to curtail renewable energy subsidies and favors the oil and gas sector, but Dunn indicated that the market may be overestimating how much Trump will change when it comes to Inflation Reduction Act and renewable initiatives. Year-to-date, shares in NextEra Energy are up around 22% and the stock is trading at around 22 times price-to-earnings. “Here’s a company that is going to grow earnings in the high-single-digits at least the next couple years,” Dunn said. “They’re a leader in the space from a technology perspective.” He added that the company should increase its long-term growth rate guidance, given the growth in AI data centers. Of 24 analysts covering the stock, 15 give it a buy or overweight rating at an average price of $88.28, according to FactSet data. This gives it upside potential of around 19%.

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