It takes more than just positive fundamentals to make it onto Morgan Stanley's new list of companies termed "scaling disruptors." The roster includes big names that the firm says are forcing major changes in at least one if not more industries, and have already reached scale.
The team, which included analysts like Brian Nowak and Adam Jonas, says these companies "represent the current winners of the digitalization era and represent $2.34 trillion of market cap."
More than three-quarters of the names are listed in the U.S., with the remaining portion coming from Asia. There were no European names that made the cut. Here are some of the winners:
Alibaba Group Holding Limited
Despite shares surging more than 50 percent over the past year, the team says it has more room to run. "We believe Alibaba only monetizes a fraction of the value it has provided to the merchants and brands. Its one-stop, closed loop digital marketing + commerce solution supported by 500 million+ unified IDs presents great potential for long-term monetization upside, in our view."
It would be impossible to say that Apple isn't a disruptor, although shares have struggled over the past year as analysts worry that its days of disruption are fading. Morgan Stanley, however, has faith in CEO Tim Cook. and says the firm can still expand outside of tech as well. "We believe Apple has the potential to be disruptive in new industries such as media, telecoms, automotive and pharma."
Priceline Group Inc.
Despite possible threats from other disruptors like Airbnb Inc., the team says Priceline has enough of a lead in its industry to remain a dominating force. "Priceline has leveraged on the scale advantage and spends more than $3 billion on digital advertising, leading to a material advantage in customer acquisition compared to legacy hotel brands."
The largest online retailer isn't even close to the end of its run, the team writes. "Amazon has further potential of disrupting industries like consumer retail, transport, media, grocery and food delivery."
There is no reason to question the social media giant's continued ability to monetize its offerings, the team writes. "Facebook continues to capitalize on its monetization potential through continued innovation and expansion of its user and advertiser value proposition."
The other names on the list included Google parent Alphabet Inc., the Chinese search engine Baidu Inc., Netflix Inc., and internet and media firm Tencent Holdings Limited. The majority of the list is outperforming the S&P 500 year-to-date, with the likes of Facebook and Alibaba up 23 percent and Tencent up 38 percent. Netflix is the worst performer, with the stock declining 15 percent since the start of 2016.