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Buy These 58 Quality Growth Stocks In Early 2025 While Investors 'dash For Trash'
BI
- Lower-quality stocks have traditionally performed well at the start of the year.
- But Morgan Stanley believes best-of-breed companies are the place to be now.
- Here are 58 quality growth stocks to buy at the start of 2025.
Change always abounds in January, but some New Year's resolutions aren't worth sticking with.
Investors have historically gravitated toward lower-quality stocks in the first month of the year. Bank of America researchers recently found that firms with lower quality scores from S&P have outperformed at a 79% clip in January since 1987, versus a 50-50 hit rate in other months.
Bank of America
This so-called "dash for trash," in the words of BofA strategists led by Savita Subramanian, could stem from a willingness to go against the grain and give less-heralded companies a shot instead of simply shifting toward popular stocks and sectors.But Morgan Stanley strategists say chasing lower-quality companies again may be a mistake.
In fact, Mike Wilson, who's the firm's chief US equity strategist, just devoted his weekly note published on Monday to extolling the virtues of high-quality stocks in this uncertain backdrop.
Morgan Stanley
"Our quality bias is rooted in the notion that we remain in a later-cycle environment, which is typically a backdrop that is consistent with outperformance of this cohort and the fact that relative earnings revisions for the high-quality factor are inflecting higher," Wilson wrote.
Morgan Stanley has suspected for years that this economic cycle is closer to the finish line than the starting point. The economic-surprise indexes Wilson and his team track have weakened lately, and soft data like confidence indicators are mixed despite a sizable post-election pop.
Morgan Stanley
However, unlike past years, the Wall Street giant isn't bearish. Morgan Stanley's S&P 500 target is lower than many of its peers, though that suggests that US stocks will rise about 10.5% in 2025. Still, they believe the year could get off to a rocky start as bond yields and the dollar rise.
"The correlation of equity returns to bond yields has flipped decisively into negative territory (yields up, stocks down and vice versa) — something we have not seen since last summer," Wilson wrote.
58 quality growth stocks to buy
Lofty interest rates don't benefit most companies, but higher-quality firms with healthy balance sheets should hold up better than their debt-riddled counterparts.
"We do see scope for broadening in leadership in 2025, but believe it will be concentrated in larger-cap, higher-quality stocks as we're entering a late-cycle extension as opposed to a new cycle," Wilson wrote.
In the note, Wilson and his colleagues highlighted a litany of quality stocks across three styles: cyclicals, defensives, and growth. All three cohorts have dozens of sound options, though it may be risky to invest in cyclical stocks in a late-cycle environment or defensives in a bull market.
With that in mind, here are the 58 high-quality stocks Morgan Stanley identified that fit into the growth basket. Interestingly, Bank of America noted that growth fund managers were underweight quality stocks heading into 2025.
Bank of America
Below is each company, sorted in alphabetical order by sector and within its sector, along with its ticker, market capitalization, price-to-earnings (P/E) ratio, sector, and industry.
1. Alphabet
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Ticker: GOOGL
Market cap: $2,410B
P/E ratio: 26.1x
Sector: Communication Services
Industry: Media & Entertainment
2. Meta Platforms
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Ticker: META
Market cap: $1,580B
P/E ratio: 29.7x
Sector: Communication Services
Industry: Media & Entertainment
3. Netflix
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Ticker: NFLX
Market cap: $375.1B
P/E ratio: 49.9x
Sector: Communication Services
Industry: Media & Entertainment
4. Spotify
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Ticker: SPOT
Market cap: $94.2B
P/E ratio: 134.5x
Sector: Communication Services
Industry: Media & Entertainment
5. The Trade Desk
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Ticker: TTD
Market cap: $62.5B
P/E ratio: 205.7x
Sector: Communication Services
Industry: Media & Entertainment
6. Amazon
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Ticker: AMZN
Market cap: $2,390B
P/E ratio: 48.8x
Sector: Consumer Discretionary
Industry: Consumer Discretionary Distribution & Retail
7. AutoZone
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Ticker: AZO
Market cap: $55.3B
P/E ratio: 21.9x
Sector: Consumer Discretionary
Industry: Consumer Discretionary Distribution & Retail
8. Chewy
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Ticker: CHWY
Market cap: $15.2B
P/E ratio: 40.1x
Sector: Consumer Discretionary
Industry: Consumer Discretionary Distribution & Retail
9. Domino’s Pizza
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Ticker: DPZ
Market cap: $14.7B
P/E ratio: 26x
Sector: Consumer Discretionary
Industry: Consumer Services
10. DoorDash
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Ticker: DASH
Market cap: $72.5B
P/E ratio: N/A
Sector: Consumer Discretionary
Industry: Consumer Services
11. Lowe’s
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Ticker: LOW
Market cap: $141.2B
P/E ratio: 20.8x
Sector: Consumer Discretionary
Industry: Consumer Discretionary Distribution & Retail
12. Lululemon
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Ticker: LULU
Market cap: $48.1B
P/E ratio: 28.6x
Sector: Consumer Discretionary
Industry: Consumer Durables & Apparel
13. Pinduoduo
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Ticker: PDD
Market cap: $137.3B
P/E ratio: 9.9x
Sector: Consumer Discretionary
Industry: Consumer Services
14. TJX
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Ticker: TJX
Market cap: $135.6B
P/E ratio: 28.4x
Sector: Consumer Discretionary
Industry: Consumer Discretionary Distribution & Retail
15. Wayfair
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Ticker: W
Market cap: $6.1B
P/E ratio: N/A
Sector: Consumer Discretionary
Industry: Consumer Discretionary Distribution & Retail
16. Wyndham Hotels
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Ticker: WH
Market cap: $7.8B
P/E ratio: 32x
Sector: Consumer Discretionary
Industry: Consumer Services
17. Yum Brands
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Ticker: YUM
Market cap: $37.5B
P/E ratio: 24.4x
Sector: Consumer Discretionary
Industry: Consumer Services
18. Colgate-Palmolive
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Ticker: CL
Market cap: $71.5B
P/E ratio: 25.1x
Sector: Consumer Staples
Industry: Consumer Staples Distribution & Retail
19. Monster Beverage
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Ticker: MNST
Market cap: $50.6B
P/E ratio: 33.4x
Sector: Consumer Staples
Industry: Food, Beverage & Tobacco
20. Walmart
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Ticker: WMT
Market cap: $734.5B
P/E ratio: 37.6x
Sector: Consumer Staples
Industry: Consumer Staples Distribution & Retail
21. Targa Resources
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Ticker: TRGP
Market cap: $40.5B
P/E ratio: 33.4x
Sector: Energy
Industry: Energy
22. Blackstone
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Ticker: BX
Market cap: $212.2B
P/E ratio: 60.1x
Sector: Financials
Industry: Financial Services
23. Mastercard
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Ticker: MA
Market cap: $469.7B
P/E ratio: 38.7x
Sector: Financials
Industry: Financial Services
24. NU Holdings
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Ticker: NU
Market cap: $53.1B
P/E ratio: 30.6x
Sector: Financials
Industry: Banks
25. Progressive
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Ticker: PGR
Market cap: $140.4B
P/E ratio: 17.4x
Sector: Financials
Industry: Financial Services
26. Visa
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Ticker: V
Market cap: $613.3B
P/E ratio: 32.1x
Sector: Financials
Industry: Financial Services
27. Align
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Ticker: ALGN
Market cap: $16.4B
P/E ratio: 37.4x
Sector: Healthcare
Industry: Healthcare Equipment & Services
28. Idexx
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Ticker: IDXX
Market cap: $35.1B
P/E ratio: 41.3x
Sector: Healthcare
Industry: Healthcare Equipment & Services
29. Insulet
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Ticker: PODD
Market cap: $18.8B
P/E ratio: 46.5x
Sector: Healthcare
Industry: Healthcare Equipment & Services
30. Intra-Cellular
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Ticker: ITCI
Market cap: $8.7B
P/E ratio: N/A
Sector: Healthcare
Industry: Pharmaceuticals, Biotechnology & Life Sciences
31. McKesson
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Ticker: MCK
Market cap: $73.6B
P/E ratio: 30x
Sector: Healthcare
Industry: Healthcare Equipment & Services
32. Stryker
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Ticker: SYK
Market cap: $137.8B
P/E ratio: 38.8x
Sector: Healthcare
Industry: Healthcare Equipment & Services
33. Zoetis
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Ticker: ZTS
Market cap: $74.7B
P/E ratio: 31.1x
Sector: Healthcare
Industry: Pharmaceuticals, Biotechnology & Life Sciences
34. Axon
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Ticker: AXON
Market cap: $45.8B
P/E ratio: N/A
Sector: Industrials
Industry: Capital Goods
35. Curtiss-Wright
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Ticker: CW
Market cap: $13.3B
P/E ratio: 33.1x
Sector: Industrials
Industry: Capital Goods
36. Eaton
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Ticker: ETN
Market cap: $137.6B
P/E ratio: 37x
Sector: Industrials
Industry: Capital Goods
37. Equifax
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Ticker: EFX
Market cap: $30.9B
P/E ratio: 55.4x
Sector: Industrials
Industry: Commercial & Professional Services
38. Trane Technologies
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Ticker: TT
Market cap: $86.1B
P/E ratio: 35.5x
Sector: Industrials
Industry: Capital Goods
39. TransDigm
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Ticker: TDG
Market cap: $70.1B
P/E ratio: 48.7x
Sector: Industrials
Industry: Capital Goods
40. TransUnion
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Ticker: TRU
Market cap: $18.1B
P/E ratio: 81.1x
Sector: Industrials
Industry: Commercial & Professional Services
41. Willscot
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Ticker: WSC
Market cap: $6.3B
P/E ratio: 298.3x
Sector: Industrials
Industry: Capital Goods
42. Adobe
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Ticker: ADBE
Market cap: $188.8B
P/E ratio: 34.7x
Sector: Information Technology
Industry: Software & Services
43. Apple
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Ticker: AAPL
Market cap: $3,700B
P/E ratio: 40.2x
Sector: Information Technology
Industry: Technology Hardware & Equipment
44. Arista Networks
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Ticker: ANET
Market cap: $149.3B
P/E ratio: 56.9x
Sector: Information Technology
Industry: Technology Hardware & Equipment
45. Atlassian
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Ticker: TEAM
Market cap: $66.3B
P/E ratio: N/A
Sector: Information Technology
Industry: Software & Services
46. Autodesk
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Ticker: ADSK
Market cap: $62.8B
P/E ratio: 58x
Sector: Information Technology
Industry: Software & Services
47. Cadence Design Systems
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Ticker: CDNS
Market cap: $84.5B
P/E ratio: 81x
Sector: Information Technology
Industry: Software & Services
48. Crowdstrike
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Ticker: CRWD
Market cap: $90B
P/E ratio: 721.9x
Sector: Information Technology
Industry: Software & Services
49. Elastic
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Ticker: ESTC
Market cap: $10.5B
P/E ratio: 183.9x
Sector: Information Technology
Industry: Software & Services
50. Fortinet
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Ticker: FTNT
Market cap: $74.8B
P/E ratio: 49.2x
Sector: Information Technology
Industry: Software & Services
51. HubSpot
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Ticker: HUBS
Market cap: $36.4B
P/E ratio: N/A
Sector: Information Technology
Industry: Software & Services
52. MongoDB
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Ticker: MDB
Market cap: $18.8B
P/E ratio: N/A
Sector: Information Technology
Industry: Software & Services
53. Nutanix
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Ticker: NTNX
Market cap: $17.2B
P/E ratio: N/A
Sector: Information Technology
Industry: Software & Services
54. Nvidia
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Ticker: NVDA
Market cap: $3,640B
P/E ratio: 58.9x
Sector: Information Technology
Industry: Semiconductors & Semiconductor Equipment
55. Salesforce
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Ticker: CRM
Market cap: $315B
P/E ratio: 54.1x
Sector: Information Technology
Industry: Software & Services
56. Synopsys
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Ticker: SNPS
Market cap: $77.3B
P/E ratio: 54.2x
Sector: Information Technology
Industry: Software & Services
57. Sherwin-Williams
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Ticker: SHW
Market cap: $85.1B
P/E ratio: 33.7x
Sector: Materials
Industry: Materials
58. SBA Communications
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Ticker: SBAC
Market cap: $22B
P/E ratio: 31.3x
Sector: Real Estate
Industry: Equity Real Estate Investment Trusts (REITs)
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