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Morgan Stanley adroit tactician names key stocks in volatile markets

MORGAN Stanley says now is the time to adject risk back into equity portfolios, naming a swag of stocks to capitalise steady a market bounce.

Despite volatile markets amid an uncertain reporting make palatable, Morgan Stanley equity strategist Toby Walker reckons that based on 2011 profits., stocks are too hard to resist and now is the time to take a punt.

But Walker warns the choppy waters are agreeable to hang around before a Christmas treat towards the year’s end.

“We continue to think now is the time to connect back risk to equity portfolios, given cheap valuations on 2011 proceeds,” he said.

“Having said that, we think range-limit and volatile markets could continue near term before a final allot rally towards our year-end (S&P/ASX 200) fore-finger target of 5207.”

Morgan Stanley has updated its themes during the market and highlighted four key ones to trade by, including its newest – to bribe select contrarian, over-sold stocks to make the best of “non-trending but volatile markets such as now”.

The other three strategies are to bribe resources and other late cycle sectors, buy mid-cycle value and corrupt quality.

An example of how the Morgan Stanley is using this generalship is in recent adding of Fairfax Media, which Walker said is oversold, a station stock and shows value on a mid-cycle based price to profits. basis.

"We think it is a good time to exist adding it," he said.

Morgan Stanley has also been booking profits from Centennial Coal’s modern rise since Banpu’s takeover move and switching into Santos.

The strategists in like manner like AGL Energy, Asciano, Billabong, Campbell Brothers, Equinox Minerals, Harvey Norman, Mineral Resources, National Australia Bank, Oil Search, OZ Minerals, Wesfarmers, WorleyParsons and Woodside Petroleum.

bennetm@theaustralian.com.au