The S&P 500 has dropped almost 10% since the start of the year, but a number of stocks including Nike (NKE - Get Report) , BlackRock (BLK - Get Report) and Constellation Brands (STZ - Get Report) have the fundamentals to bounce back, said Dan Skelly, Head of Equity Model Portfolio Solutions at Morgan Stanley Wealth Management.
Nike is down 12% year to date, but it is a quality growth franchise which satisfies Skelly's list of investment criteria for this choppy environment. Skelly said Nike demonstrates pricing power, innovation, leverage to Millennial and online trends, and health and wellness. He said he favors the consumer discretionary sector in particular. Nike is Morgan Stanley analyst Jay Sole's top pick in the footwear and apparel space.
"You are going to see some marginal share losses to Under Armour (UA - Get Report) and Adidas (ADDYY) , but no one has the global diversified footprint of a Nike, particularly across the women's and running businesses," said Skelly.
"A lot of folks also don't realize this, but BlackRock has more than $100 billion in alternatives, another area of secular strength within the asset management world," said Skelly. "We see this as an opportunity for a really strong long-term bet."
Finally, Skelly said the recent momentum in Constellation Brands' beer and wine business will continue, especially considering the strides make by Corona. He said the stock is a smart play on consumer wage growth. The company's recent analyst day gave him increased conviction in his long-term view, he said.
"The low-end consumer is finally seeing a boost in wages and that is benefiting some of these vice areas like beer and wine," said Skelly.
By Gregg Greenberg
Source:http://www.thestreet.com/story/13453302/1/3-battered-stocks-that-are-ready-to-bounce-back.html
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