Morgan Stanley says industrial companies will dominate the market going forward - here are the 8 stocks they love the most

Ticker: AXL

Market cap: $2 billion

Price target: $22

Rationale: "AXL plans to drive leverage down from ~3x to ~2x by the end of 2019, with the potential for share buybacks in 2020+."

Source: Morgan Stanley

Ticker: CAT

Market cap: $84 billion

Price target: $187

Rationale: "With trade and peak cycle fears overblown and ~30-40% of the portfolio at trough, we see an attractive set up."

Source: Morgan Stanley

Ticker: F

Market cap: $37 billion

Price target: $15

Rationale: "F represents a cheap call option on restructuring, trucks, data, and SOTP potential."

Source: Morgan Stanley

Ticker: HON

Market cap: $122 billion

Price target: $175

Rationale: "HON represents a long-term rerating opportunity as the company spins out slower growth assets and emphasizes tech differentiation, creating a 2x GDP growth algorithm in a sector where growth is increasingly scarce."

Source: Morgan Stanley

Ticker: KNX

Market cap: $6.4 billion

Price target: $55

Rationale: "KNX's current risk reward is very attractive given favorable cyclical trends (upcoming peak season and difficult driver market), potential upside to SWFT turnaround synergies, and cheap valuation (KNX is trading at 2008/09 recession levels)."

Source: Morgan Stanley

Ticker: LUV

Market cap: $36 billion

Price target: $67

Rationale: "High quality characteristics (above-average margins, shareholder friendly approach, IG B/S) are intact."

Source: Morgan Stanley

Ticker: UTX

Market cap: $107 billion

Price target: $160

Rationale: "Given the rising potential for a restructuring, option value for the GTF, and accretion from M&A, we remain constructive on UTX."

Source: Morgan Stanley