Lower Oil Prices: Which Stocks Stand to Benefit Most?

Crude oil’s massive price collapse is among this year’s biggest market stories.

But who wins and who loses? It’s pretty intuitive why many energy stocks are hurting, and that the extra cash in Americans’ pockets will wind up somewhere. Morgan Stanley’s equity research team does an impressively deep dive across industries to corral some less clear-cut winners and losers.

Airlines consume a huge amount of fuel, so much in fact that fuel accounts for roughly one-third of the industry’s operating expenses. Most airlines hedge the price of fuel to reduce price volatility. Not American Airlines (AAL) or Allegiant Travel (ALGT), Morgan Stanley says, making them the two clearest beneficiaries of lower oil prices.

For autos, most worries are directed at electric-car maker Tesla Motors (TSLA): “While Tesla's current addressable market is not terribly influenced by the price of gasoline (considering average transaction prices track well in excess of $100k), lower-for-longer oil certainly hurts the case for mass-market adoption of electric vehicles.”

So-called alternative asset managers that have an opportunity to be nimble and snap up profitable energy assets might also shine. Morgan Stanley likes private-equity company KKR & Co (KKR), which has lots of cash on hand: “Dislocations create ‘buy-low’ opportunities which often lead to higher future returns and robust cash performance fees.”

Morgan Stanley also likes Monster Beverage (MNST) in part because Americans getting cheaper gas might be more ready to splurge on energy drinks. Gas station/convenience stores account for three-fourths of Monster’s sales, Morgan Stanley says. It also like spirits maker Constellation Brands (STZ), assuming that consumers will be more ready than ever to pony up for higher-priced booze.

In food, Morgan Stanley suggests that WhiteWave Foods (WWAV), which makes products such organic dairy and almond milks, might benefit from “consumers' ability to’"trade up’ out of conventional foods.” The same principle applies to Texas Roadhouse (TXRH).

Lower gas prices also are likely to make shipping costs lower. Morgan Stanley sees lower fuel prices trickling into per-unit shipping costs in the first quarter at Amazon.com (AMZN).

What about apparel companies and retailers? Morgan Stanley likes companies that target brands that are most popular with “lower-income consumers,” who they deem as most likely to put the money they save into new purchases. Analysts like The Children's Place (PLCE), Foot Locker (FL), Finish Line (FINL), Brown Shoe (BWS), and Skullcandy (SKUL). The same applies for retailers including Aeropostale (ARO) Burlington Stores (BURL) and Ross Stores (ROST).