To The Moon

Despite the general pessimism about consumer spending, the analysis is not entirely negative.

For example, Morgan Stanley is particularly bullish on the airline and cargo sectors, discount stores, luxury goods, and the entertainment sector in terms of live events and concerts. In addition, some stocks such as e-commerce, leisure and food retail are also seen as potentially resilient.

We remain bullish on U.S. regional airlines as we continue to see signs of suppressed strong demand being unleashed," the report notes.

Travel

In addition, weaker demand for leisure travel due to higher prices is expected to be offset by the return of business travel and the easing of international travel restrictions.

Major airlines such as $Alaska Air(ALK)$ , $Southwest Airlines(LUV)$ , $American Airlines(AAL)$ ,$Delta Air Lines(DAL)$ , $United Continental(UAL)$ are listed as preferred airlines by the bank.In contrast, reviews of ultra-low-cost carriers such asALGTandSNCYare less positive.

However, the bank notices that the hotel and cruise industry, which underpins the sector, may have the broadest performance of the individual stocks.

While $InterContinental Hotels Group PLC(IHG)$ , $Compass Group Plc(CMPGF)$ and $Whitbread Plc(WTBDY)$ are considered strong performers during the downturn, many hotel and cruise operators are being more critically evaluated.

The bank also expects theme parks and movie theaters to benefit from roughly the same trend as they are relatively inexpensive forms of entertainment. As a result, both sectors will absorb demand as high-end consumers shift to more affordable entertainment experiences.

Finally, discount stores are also favored by the bank, including $TJX Companies(TJX)$ , $Burlington(BURL)$ and $Ross(ROST)$ .

The report elaborates,

"We see the most opportunity for discount stores, as we expect the sector to benefit from consumers' growing value/low price preference if the economy slows.

More specifically, our earnings-per-share estimates are in line with Wall Street's, despite the facts that stock valuations for such discount stores have compressed by an average of 20% so far this year.

And we think earnings per share are still likely to rise after these companies reset their fiscal year estimates in their first quarter earnings reports."

Finally, the bank also advises investors not to completely abandon weak sectors such as consumer hardware and hard-line/food retail. In these cases, $Apple(AAPL)$ and $Costco(COST)$ are seen as the best choices that could stand out during the market downturn.