Morgan Stanley's latest industrial stock picks ranked by Quant ratings

With investors navigating a volatile industrial sector, stocks that combine improving earnings expectations with relatively strong underlying quality could offer a potential starting point for further research.

Morgan Stanley Research has identified a group of industrial stocks that rank in the top tercile of its quality universe, have seen forward EPS estimates improve since the end of June, and have nevertheless declined more than 10% over the same period.

The screen highlights 15 stocks, ranked below according to Seeking Alpha's Quant Ratings. EnerSys (ENS) leads the group with a Quant Rating of 3.12, followed by Leonardo DRS (DRS) at 3.10 and Carlisle Companies (CSL) at 3.05. Powell Industries (POWL) and Broadridge Financial Solutions (BR) round out the top five, with ratings of 3.03 and 3.01, respectively.

Despite their improving forward earnings outlook, none of the stocks on the list carries a bullish Quant Rating. All 15 names are rated Hold, with scores ranging from 2.64 to 3.12.

The group spans several areas of the industrial universe, including defense contractors such as Booz Allen Hamilton (BAH) and BWX Technologies (BWXT), as well as diversified industrial names such as Waste Management (WM) and Snap-on (SNA).

Seeking Alpha's Quant Ratings system grades stocks on their relative performance on key quantitative metrics. It hones in on stocks with the strongest combination of value, growth, profitability, EPS revisions and price momentum relative to their sector peers. See how Strong Buy rated stocks have performed vs. Wall Street analysts and the S&P 500.

Here is the full list, ranked by Quant Rating:

1. EnerSys (ENS) — Quant Rating: 3.12
2. Leonardo DRS, Inc. (DRS) — Quant Rating: 3.10
3. Carlisle Companies Incorporated (CSL) — Quant Rating: 3.05
4. Powell Industries, Inc. (POWL) — Quant Rating: 3.03
5. Broadridge Financial Solutions, Inc. (BR) — Quant Rating: 3.01
6. Booz Allen Hamilton Holding Corporation (BAH) — Quant Rating: 3.00
7. Waste Management, Inc. (WM) — Quant Rating: 2.91
8. Paychex, Inc. (PAYX) — Quant Rating: 2.89
9. Snap-on Incorporated (SNA) — Quant Rating: 2.83
10. BWX Technologies, Inc. (BWXT) — Quant Rating: 2.80
11. Nextpower Inc. (NXT) — Quant Rating: 2.80
12. Acuity Inc. (AYI) — Quant Rating: 2.75
13. UL Solutions Inc. (ULS) — Quant Rating: 2.69
14. ESCO Technologies Inc. (ESE) — Quant Rating: 2.67
15. A. O. Smith Corporation (AOS) — Quant Rating: 2.64

Industrials ETFs: (XLI), (VIS), (FXR), (IYJ), (FIDU), and (RSPN)