MORGAN STANLEY: These are the best stocks to own for the connected-car revolution

Ticker: CHA

Year-to-date performance: -1.36%

Morgan Stanley's take: "An AV-enabled 5G network significantly increases tower demand, indirectly benefiting CT/CU as their stakes in China Tower represent 20%-25% of their respective market caps."

Source: Morgan Stanley

Ticker: CHU

Year-to-date performance: -1.36%

Morgan Stanley's take: Like China Telecom, "An AV-enabled 5G network significantly increases tower demand, indirectly benefiting CU as its stake in China Tower represent 25% of its market cap."

Source: Morgan Stanley

Ticker: KT

Year-to-date performance: -15.27%

Morgan Stanley's take: "KT’s early 5G roll-out in Korea, coupled with its superior fiber network, positions it well to be a preferred vendor from an AV perspective, in which case we could see significant upside to its RoIC profile."

Source: Morgan Stanley

Ticker: DCM

Year-to-date performance: +7.95%

Morgan Stanley's take: "NTT, via its market-leading mobile arm NTT DoCoMo, is expected to be a 5G leader (starting at the 2020 Tokyo Olympics). NTT’s nationwide fiber network can be expected to facilitate the smooth launch of 5G wireless technology. DoCoMo may also partner with the Japanese autos industry."

Source: Morgan Stanley

Ticker: ORAN

Year-to-date performance: +2.28%

Morgan Stanley's take: "Orange has a history of being a technology leader (TV over DSL, 2001 smart-phones, etc.), and may seek to play a leading role in AVs in large French cities, probably as of 2022. Orange France has the largest wireless capex budget, will have an extensive fibre footprint (FTTH, fibre-to-the-base station) and may also partner with the blue-chip French automotive industry."

Source: Morgan Stanley

Ticker: RELIANCE (NSE)

Year-to-date performance: +0.69%

Morgan Stanley's take: "The conglomerate's Telco subsidiary - Reliance Jio (India's aggressive new entrant) has the ambition of becoming a leading digital player. Jio has made heavy investments in network and fibre."

Ticker: TEF

Year-to-date performance: +0.25%

Morgan Stanley's take: "Spain's wireless market leader is well-positioned to accommodate AV on its networks via high capital spend, nationwide fibre and its Digital focus."

Source: Morgan Stanley

Ticker: VZ

Year-to-date performance: -13.02%

Morgan Stanley's take: "Verizon Wireless, as mobile market leader, has the largest wireless capex budget in the US, and is likely to lead on 5G (as it did on 4G in 2010/11). Verizon Connect offers fleet management and connected vehicle solutions globally. Verizon acquired Hughes Telematics, Fleetmatics and Telogis in recent years."

Source: Morgan Stanley

Ticker: VOD

Year-to-date performance: -11.31%

Morgan Stanley's take: "Europe's largest wireless operator and IoT market leader; has the greatest capex budget across the European continent."

Source: Morgan Stanley

Ticker: AMT

Year-to-date performance: -1.02%

Morgan Stanley's take: "Leading global tower provider (US, LatAm, Asia, Europe), investing in innovation to diversify revenues to new use cases. "

Source: Morgan Stanley

Ticker: CELLNEX

Year-to-date performance: +7.27%

Morgan Stanley's take: "Leading European tower provider (present in Spain, Italy, France, NL, Switzerland, UK), investing in small cells and mobile edge computing. Will seek to diversify revenues to new use cases such as 5G."

Source: Morgan Stanley

Ticker: CCI

Year-to-date performance: -4.07%

Morgan Stanley's take: "Leading macro wireless tower, small cell and fiber operator, 100% US focused."

Source: Morgan Stanley

Ticker: EQIX

Year-to-date performance: -11.35%

Morgan Stanley's take: "Equinix is the leading global data center operator with highly connected facilities in many of the world’s key markets."

Source: Morgan Stanley

Ticker: ZAYO

Year-to-date performance: -4.79%

Morgan Stanley's take: "As one of the leading pure play fiber providers in the US and Europe, Zayo is well positioned to support the tremendous bandwidth requirements of AV and 5G implementation."

Source: Morgan Stanley

Ticker: CSCO

Year-to-date performance: +18.66%

Morgan Stanley's take: "Cisco’s strength is connecting more devices onto a network. Through their acquisition of Jasper Technologies, they have a software company that eases one of the largest pain points for carriers / auto manufacturers, helping manage the increased number of connections (e.g. setup, network management, billing). Cisco is interested in making sure they have the most visibility into the network, for automation, security and analytics purposes – with autos being one of the next potential sources of data."

Source: Morgan Stanley

Ticker: COMM

Year-to-date performance: -22.45%

Morgan Stanley's take: "5G will require more fibre backhaul and small cells. CommScope, as a provider of antenna and small cell technology, is likely to benefit with more connection points. Additionally, as a fiber provider, they benefit from the expansion of backhaul in the network."

Source: Morgan Stanley

Ticker: GLW

Year-to-date performance: -16.62%

Morgan Stanley's take: "Similar to CommScope, Corning supplies fiber for the additional backhaul and data centers needed to enable AV. Additionally, with their acquisition of SpiderCloud, they have a play on the growth of small cells, as well."

Source: Morgan Stanley

Ticker: DASTY

Year-to-date performance: +24.84%

Morgan Stanley's take: "Global leader in design software for autos – integration between physical design and design/test of electronics and software will become increasingly important."

Source: Morgan Stanley

Ticker: HEXAGON

Year-to-date performance: +12.66%

Morgan Stanley's take: "Its sensors and mapping technologies are potentially key for AV network roll out."

Source: Morgan Stanley

Ticker: QCOM

Year-to-date performance:

Morgan Stanley's take: "Qualcomm develops radio technology, making them a key 5G enabler. By selling modem chips and licensing their technology into autos, they generate another revenue stream outside of mobile phones today. Additionally, Qualcomm has developments beyond radio technology, working on innovations around continuous localization, pointing to the fact that some of the LIDAR and GPS systems being thought of today for AV are prohibitively expensive."

Source: Morgan Stanley