Markets have proven highly volatile in the first two months of President Trump’s new term of office, as investors are worried about everything from trade and tariff policy to increased inflation to geopolitics.
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But there are some green lights flashing on the market dashboard. For starters, the prices of some staple goods are coming down – prices are dropping for both gasoline and eggs, for instance – and in the past two weeks, markets have turned back upward.
Covering the market situation from Morgan Stanley, equity strategist Mike Wilson takes a deeper dive into the ins and outs of financial trends—and he comes out on a cautiously optimistic note, at least for the near term.
“In our view, the combination of stronger seasonals, a falling dollar/10-year yield, oversold sentiment/positioning indicators and month/quarter end flows continue to make ~5500 support for a tradeable rally in the near term. As expected, lower quality, higher beta stocks have led the market higher after it reached the lower end of our 1H trading range (~5500-6100). Keep in mind that while the S&P was down only 10% in this correction, many stocks experienced 20%+ drawdowns,” Wilson noted.
The stock analysts at Morgan Stanley are picking out specific stocks for investors to bet on in such a rally. Using the TipRanks platform, we’ve looked up the bigger picture on two of them—both are Buy-rated. Let’s dive in.
Carvana Company(CVNA)
The first stock we’re looking at here is Carvana, a company that specializes in the resale of used vehicles. The Tempe, Arizona-based company was only founded in 2012, but is now the second-largest used car retailer operating in the US.
Carvana offers customers a unique used-car shopping experience. The company has brought the used car market online, allowing customers to shop for cars and compare prices through the website or via mobile app. Once a customer has chosen a vehicle, he can arrange delivery to the nearest Carvana office. In a twist that is unique in the US used car market, Carvana also offers car-sized ‘vending machines,’ automated facilities where vehicles can be delivered for test drives or pick-up. The company’s network currently includes more than 30 of these vending machines, with more planned.
Despite the recent high volatility, Carvana’s shares have gained 127% in the past 12 months. With the COVID pandemic in the rear-view mirror, Carvana has been thriving – and has emerged as a leader in the nation’s used-car market; a look at its most recent financial results, covering the fourth quarter and full year of 2024, will show that the company’s sales and revenues are increasing.
In the full-year 2024, Carvana reported a 33% year-over-year increase in sales, to 416,348 units. This brought in record annual revenue, which hit $13.67 billion for a 27% year-over-year increase. In the fourth quarter, unit sales hit 114,379, for a 50% y/y gain, and quarterly revenue hit $3.55 billion, up 46% y/y. Both the full-year and quarterly net income figures were records, at $404 million and $159 million, respectively.
Morgan Stanley’s automotive expert Adam Jonas is impressed by Carvana’s success and potential and sees the stock’s current pullback from peak levels as a sound buying opportunity. He writes of the stock, “Carvana shares have pulled back >25% since its 2025 high of $285, primarily due to the broader market unwind and sensitivity around high-growth/consumer-exposed names on tariff/geopolitical fears and positioning. We believe this broader market pullback creates an opportunistic entry point for a company we believe to be a generational compounder (22% revenue CAGR through 2030, 15% through 2040) with a business model (vertically integrated, national inventory sourcing and reconditioning, operating leverage with scale) that positions Carvana for upside optionality, as well as a favorable risk-reward skew…”
Jonas goes on to put an Overweight (i.e., Buy) rating on CVNA shares, and his price target, now set at $280, implies a 12-month upside potential of 37%. (To watch Jonas’ track record, click here)
This stock’s Moderate Buy consensus rating is derived from 15 recent analyst reviews that include 10 Buy and 5 Hold ratings. The stock is currently priced at $204.87, and its $285.71 average price target is slightly more bullish than the Morgan Stanley view, suggesting that a 39.5% increase is in store for the stock this coming year. (See CVNA stock forecast)
ResMed, Inc.(RMD)
Next on our list is a San Diego-based medical equipment company, ResMed. ResMed focuses on issues of sleep and breathing, and its products include CPAP devices, designed to treat sleep apnea, as well as treatments for snoring and insomnia. The company makes use of AI technology to power digital health solutions, enabling smarter, cloud-connected devices for more personalized home healthcare solutions. ResMed describes its mission as delivering better sleep and breathing, for a better life.
Earlier this month, the company made an important marketing move, announcing that it is consolidating all of its products under a single, unified brand name. Going forward, all of ResMed’s products, no matter their particular health application, will be marketed under the ResMed name. The goal of this move is to create a recognized brand presence for sleep and breathing medical technologies. ResMed expects that a unified brand will make its marketing campaigns easier to manage.
As a next step, ResMed will also launch three marketing initiatives. The first aims at destigmatizing CPAP therapies in the US market; the second will target primary care physicians in an effort to promote earlier diagnosis of sleep apnea; and the third campaign will target various markets in Europe and the Asia-Pacific region to overcome barriers to seeking treatment for sleep disorders. The company estimates the global patient base for sleep apnea, insomnia, COPD, or other respiratory insufficiencies at 2.3 billion people, or about 28% of the world’s population.
At the end of January, ResMed reported its financial results for fiscal 2Q25. The company’s top-line revenue, at $1.28 billion, was up 6.7% year-over-year, and beat the Street’s forecast by $10 million, while the bottom-line earnings, reported as a non-GAAP EPS, came to $2.43, $0.12 ahead of the estimates. ResMed reported an operating cash flow in the quarter of $309 million.
This stock caught the attention of Morgan Stanley’s David Bailey, who notes that ResMed is currently taking advantage of a competitor’s misfortune – and improving its market share position. He also notes that the company has sound prospects for growth, saying of ResMed’s stock, “Resmed is a global market leader, with increased share following the recall of Philips DreamStation devices; our forecasts assume Philips re-enters the US market in 2027. Our forecasts imply high single-digit EPS growth over the medium-longer term, with solid free cash flow generation and a strong balance sheet position… We see potential for increased diagnosis/awareness following the approval of GLP-1 RA in the treatment of OSA in obese patients… We also see valuation appeal at current levels.”
For Bailey, all of this adds up to an Overweight (i.e., Buy) rating for RMD. He complements this with a bullish price target, which at $280 points toward a one-year gain of 26%. (To watch Bailey’s track record, click here)
This stock has 14 recent analyst reviews that break down to 9 Buys and 5 Holds for a Moderate Buy consensus rating. RMD shares are priced at $221.88, and their $274.40 average price target together imply an upside potential of 24% by this time next year. (See RMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
