Morgan Stanley has identified a potential buying opportunity in the S&P 500's recent pullback. Since mid-summer, portfolio managers have shifted their stockpicking strategy to focus on companies with free cash flow, profitability, high margins, strong balance sheets and stable earnings.
The concentration of gains in a narrow group of stocks masks a broader retreat across the wider market, according to Morgan Stanley's analysis. For US investors, this shift suggests opportunities may exist among undervalued stocks outside the most popular holdings.