Morgan Stanley Says These 2 Stocks Are Built for a Volatile Market

A volatile stock market can make picking individual companies feel especially risky. Yet Morgan Stanley says this may be exactly the kind of environment where financially strong businesses start standing out from the crowd. Whether you're ready to start investing or already own stocks, the firm's latest thinking points toward quality rather than simply chasing whatever has risen fastest. This shift could put a different group of companies in focus.

Morgan Stanley Chief U.S. Equity Strategist Mike Wilson has argued that the market is rotating toward higher-quality companies as valuations remain elevated and volatility increases. Wilson furthered his point, explaining that the firm's picks favor businesses with high free-cash-flow yields, strong balance sheets, less earnings variability, and high profit margins.

Morgan Stanley analysts then highlighted SEI Investments and Charles Schwab as stocks that fit that broader theme. Here's what you need to know about these two companies.

Why Morgan Stanley is emphasizing quality

Morgan Stanley isn't predicting that quality stocks will simply rise whenever the market falls. Instead, the argument is that companies producing steadier earnings and stronger cash flow may have more room to absorb economic surprises, higher costs, or shifts in investor sentiment. Wilson has remained broadly constructive on stocks in 2026, pointing to healthy earnings trends even as he acknowledges that corrections and leadership changes can occur.

That backdrop matters because a "quality" label isn't the same thing as a guarantee. Even a profitable company with a strong balance sheet can fall if earnings disappoint, its valuation becomes too expensive, or conditions in its industry weaken.

SEI Investments has a margin and sales story

SEI Investments (NASDAQ:SEIC) provides investment processing, technology, asset management, and other services to financial institutions, advisors, investment managers, and institutional clients.

SEI reported second-quarter revenue of $641.6 million, up 15% from a year earlier, while adjusted earnings per share increased 38% to $1.66. Its adjusted operating margin climbed to 32%, and roughly three-quarters of second-quarter sales events came from alternative investments.

Morgan Stanley analyst Ryan Kenny named SEIC a Morgan Stanley "Top Pick," citing margin expansion, sales momentum, and growing exposure to alternatives as reasons the stock could receive a higher valuation. His $125 12-month price target represents about a 21.5% upside from the roughly $102.88 share price as of July 30, 2026. However, that's just one analyst's projection, not an assured result, as stock prices can change daily.

As of August 31, 2026, SEIC traded at roughly $111.17 per share. It's worth noting that any changes in the share price may change analyst price targets.

Charles Schwab is benefiting from several growth engines

Charles Schwab (NYSE:SCHW) is much larger and may be more familiar to individual investors. Its businesses span brokerage, banking, financial advice, lending, custody, and asset management, giving the company several potential sources of revenue.

In the second quarter, Schwab reported record net revenue of $7.1 billion, up 21% year over year, while adjusted earnings per share climbed 42% to $1.62. Total client assets reached $13.08 trillion, and daily average trades hit a record 11.9 million.

Morgan Stanley analyst Michael Cyprys argues that Schwab's growth story now extends beyond interest income. He pointed to trading, lending, financial advice, asset management, platform economics, and new products as potential long-term drivers. Cyprys maintains an Overweight rating and a $136 target, which, at its cited $104.47 share price as of July 30, 2026, implied roughly 30% upside potential over 12 months.

As of August 31, 2026, SCHW traded at roughly $110.17 per share. It's important to remember that any changes in the share price may change analyst price targets.

Wall Street is broadly positive, but not unanimous

Both stocks currently hold a Strong Buy consensus rating. SEIC had five Buy ratings and one Hold, while SCHW had 14 Buys, two Holds, and one Sell. The average 12-month targets at that point were $122.60 for SEIC and $122.67 for SCHW.

Those numbers are useful for understanding sentiment, but they aren't forecasts investors should treat as fact. Analyst ratings and price targets can change quickly after earnings reports, economic data, company announcements, or large stock-price moves. A Strong Buy consensus simply means analysts were predominantly bullish when the ratings were collected.

Quality stocks still carry real risk

Both companies operate in financial services, so owning the two doesn't necessarily provide the same diversification as spreading money across unrelated sectors. SEI's outlook depends partly on continued sales execution, assets under management, market levels, and demand for its investment and technology services. Schwab can be affected by interest rates, client cash behavior, trading activity, lending conditions, market values, and competitive pressure.

That's especially important for retirees who may have less time to recover from a large loss. Morgan Stanley's analysis can serve as a starting point for research, but an individual stock still needs to fit your portfolio size, diversification, risk tolerance, and expected holding period.

Bottom line

Would you be comfortable owning either stock if the market dropped sharply and the analyst price target never materialized? That's a better test than buying simply because Morgan Stanley or the broader analyst community currently sees upside.

SEI Investments and Charles Schwab both have recent financial results that help explain Morgan Stanley's quality thesis, but neither is immune to market or company-specific risk. Researching the business, valuation, portfolio fit, and downside alongside the bullish case can give you a better foundation to grow your wealth. 

This article reflects Morgan Stanley's analysis as of July 2026 and is general information, not a FinanceBuzz recommendation to buy either stock or personalized investment advice.

This article is for informational purposes only and should not be considered investment advice.

You May Also Like

Almost 80% of Americans Fear a Retirement Age Increase — Here’s the Real Reason Why

By FinanceBuzz Editors

10 Smart Money Moves to Retire

By FinanceBuzz Editors

The Easiest Way to Diversify Your Investment Portfolio With Fine Art

By FinanceBuzz Editors

7 Brilliant Ways to Build Wealth After 40

By FinanceBuzz Editors

5 Ways Seniors Are Throwing Away Money

By FinanceBuzz Editors

Best High-Yield Savings Accounts of September 2026

By FinanceBuzz Editors

Help Protect Your Savings From Stock Market Volatility With Gold

American Hartford Gold Benefits

• American Hartford Gold helps individuals protect their retirement by rolling over IRAs and 401(k)s into physical gold.
• Includes FREE IRA rollover and storage for up to 3 years.
• Get up to $20,000 in free silver on qualifying purchases.

Download your guide for free

---

Subscribe Today

Learn how to make an extra $200

Get vetted side hustles and proven ways to earn extra cash sent to your inbox.

or

Subscribe Now →

By submitting this form you agree to receive emails from FinanceBuzz and to the privacy policy and terms