Morgan Stanley reveals 6 high conviction ASX stock picks

Broker Morgan Stanley is telling investors to look through the macro risks and focus on owning companies that will deliver profit growth ahead of the market's expectations. 

Its equity strategist, Simon Clark has named six standout stock picks from its Australian research team, across a range of sectors and sizes it thinks will deliver for patient investors. 

So, given most people are reading for ideas on how to make money in shares, let's see what Morgan Stanley thinks.  

Tech sector for growth

In no particular order, the first business it names is cargo logistics software-as-a-service (SaaS) player WiseTech Global (ASX: WTC). 

The broker thinks WiseTech will create material shareholder value as it has a long growth runway, with a large and fast-growing total addressable market. It also names WiseTech as a potential winner from artificial intelligence (AI) services that will help its software customers reduce costs. The broker values WiseTech stock at $140, versus the $109.92 it fetched on Tuesday. 

Another pick is fast-growing smartphone app Life360 (ASX: 360), which has acquired more than 80 million monthly active users, mainly in the US. It's no secret this is a hot growth stock and Morgan Stanley thinks it can run even higher. 

"With the revenue pool mainly from paying subscribers, the ramp up of digital advertising is a potential catalyst for the stock, where many successful mobile apps monetise through paid digital ads," the broker wrote. 

"Regardless of the path to monetisation, the key currency of a consumer app is the number of subscribers and ultimately underlying usage."

Morgan Stanley values Life360 stock at $40. It's rocketed 1100% over the past five years and changed hands for $32.18 on Tuesday. 

Financials

The insurance sector has been a top performer for the market over the past 12 months and Morgan Stanley's top pick is Suncorp Group (ASX: SUN). The broker says it trades at a discount to IAG (ASX: IAG) despite boasting better operational performance and market share growth. 

Morgan Stanley has a $25.20 price target on the stock, versus a market price of $21.61. 

Generation Development Group (ASX: GDG) is an under-the-radar financials pick that operates in the managed accounts, investment bonds, and research markets. It's also run by Olympic swimmer Grant Hackett, who has a strong track record growing the business. 

"GDG has a strong balance sheet characterised by high margin and free cash flow generation. The company has shown a solid track record with its shares increasing significantly over the past five years, supported by a strong leadership team," Morgan Stanley said. 

"GDG's growth is driven by structural growth tailwinds in its key markets, particularly as Managed Accounts see higher adoption for their scalability and efficiency, and as Investment Bonds attract investors seeking tax-efficient growth alternatives."

Other professional investors like Ophir Asset Management also own GDG and back it to grow in the financial advice sector. Morgan Stanley is 'overweight' with a $5.65 price target. 

Property and IT

A fifth pick is IT hardware and software distributor Data#3 Ltd (ASX: DTL). Morgan Stanley views it as a beneficiary of growing corporate demand for AI, cloud, and cybersecurity services. 

Data#3 posted a net profit before tax up 4.1% to $32 million for the first half of FY 2025 on earnings of 14.4 cents per share. Morgan Stanley values shares at $8.90 and says it will benefit as the growth of the digital economy accelerates over the long term. 

The final selection is from the real estate sector favoured as a defensive bulwark by many investors focused on steady growth and dividends. 

Morgan Stanley likes Charter Hall Group (ASX: CHC) on the basis that the value of its properties under management is expected to grow from $66.4 billion today to around $89 billion in FY 2027. 

"The growth trajectory is supported by favourable conditions such as declining global interest rates and a recovery in asset valuations and capital flows," said Morgan Stanley.

"CHC is also actively raising various new funds across different sectors and ramping up developments, particularly in Industrials. The company is recognised for its strong platform in sourcing investments and deploying capital as well as maintaining robust relationships within the property market."