Morgan Stanley's Top Picks Ahead in September for More Upside

As September approaches, Morgan Stanley has identified several stocks that it believes have significant upside potential. According to the Wall Street firm, names like Chewy still have room to run, while other opportunities include Nu Holdings, Cummins, Perimeter Solutions, and Cadence Design Systems—all of which carry an overweight rating from the bank.

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Perimeter Solutions (PRM)

Morgan Stanley has added Perimeter Solutions, a leading provider of firefighting products, to its list of top ideas. Analyst Daniel Kutz believes the company’s growth trajectory makes it an attractive choice, especially in today’s uncertain economic environment.

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“PRM’s unique portfolio is tied to demand drivers that are largely disconnected from broader macroeconomic trends,” Kutz explained. “This gives the company earnings resilience against risks like tariffs, trade tensions, and potential recessions.”

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Near-term catalysts include increased wildfire activity and possible merger-and-acquisition opportunities. Reflecting his bullish outlook, Kutz raised his price target on Perimeter Solutions from $17 to $25 per share, citing the stock’s compelling valuation.

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Notably, Perimeter shares have already surged 75% year-to-date, yet Morgan Stanley believes there’s still upside ahead.

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Chewy (CHWY)

The online pet supply giant Chewy remains one of Morgan Stanley’s favorite picks as it gears up for its next earnings report on September 10. Analyst Nathan Feather points to improving market conditions and strong internal performance metrics as reasons for optimism.

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“We see a strong second-quarter earnings setup and remain tactically positive given improving pet industry trends, robust alternative data, and underappreciated cost efficiencies,” Feather said.

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Morgan Stanley emphasizes that Chewy’s stock—already up 23% this year—still looks attractive at current levels. Feather calls Chewy the firm’s top pick, citing market share gains, a margin turnaround, and an emerging clinic strategy as key growth drivers.

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Nu Holdings (NU)

Digital banking leader Nu Holdings, the parent company of Nubank, is another high-conviction idea for Morgan Stanley. Analyst Jorge Kuri praised the company for delivering a “strong and clean” quarter, with performance metrics that exceeded expectations across the board.

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Following its August earnings release, Kuri reiterated his bullish view: “Our bottom-up model, built by product and by country with detailed unit economics and TAM assumptions, suggests Nubank could achieve a $100 billion valuation by 2026, up from around $62 billion today.”

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The firm also notes Nubank’s robust unit economics, advanced technological infrastructure, and the potential for continued growth in its lending and digital banking segments. Shares are up 42% in 2025, but Morgan Stanley still sees more room for gains.

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Cummins (CMI)

Another name on Morgan Stanley’s overweight list is Cummins, a global leader in engine manufacturing and power solutions. The firm argues that the market is overly pessimistic, pricing in a heavy-duty and medium-duty truck demand downturn in the second half of 2025 that rivals the 2008 financial crisis.

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Morgan Stanley believes this outlook is too severe. “Operational efficiencies and strategic investments in Power Systems strengthen our conviction that Cummins can continue to outperform despite cyclical concerns,” the firm said.

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Cadence Design Systems (CDNS)

Rounding out the list is Cadence Design Systems, a leader in electronic design automation (EDA). Morgan Stanley views the company as well-positioned to benefit from AI-driven innovation in chip design and continued structural growth in the semiconductor sector.

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The firm highlights Cadence’s deep customer relationships, dominance in analog and mixed-signal design, and strong balance sheet as key competitive advantages. With the rollout of advanced AI-enabled EDA tools, Morgan Stanley expects Cadence to maintain its leadership position and capitalize on industry tailwinds.

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