Here's Why Morgan Stanley (MS) Stock is a Must Buy Right Now

Core Viewpoint - Morgan Stanley is positioned for growth due to strategic expansion efforts and a solid balance sheet, with a favorable macroeconomic backdrop expected to revive its investment banking business, strengthening financials [1] Earnings Growth - Morgan Stanley has experienced earnings growth of 4.7% over the past three to five years, driven by top-line growth and strategic buyouts [1] - Earnings are projected to grow at rates of 23.6%, 11.2%, and 4.1% in 2024, 2025, and 2026, respectively [2] Revenue Strength - The company’s net revenues have shown a CAGR of 6.2% from 2018 to 2023, primarily due to growth in investment management and wealth management segments, reducing reliance on capital markets-driven revenues [2] - Total net revenues are estimated to grow by 6.3%, 4.2%, and 2% in 2024, 2025, and 2026, respectively [3] Strategic Expansion Efforts - Morgan Stanley has undertaken strategic expansion initiatives, particularly in Europe and Canada, supported by strong liquidity and balance sheet [3] - In July 2023, the company announced plans to merge certain operations with Mitsubishi UFJ Financial Group to enhance its presence in Japan [4] Strong Balance Sheet - As of March 31, 2024, Morgan Stanley had long-term debt of $266.2 billion, with approximately $19.7 billion maturing in the next 12 months, and cash and cash equivalents of $102.3 billion [5] - The company is expected to meet its debt obligations even in adverse economic conditions due to its investment-grade ratings and stable outlook [5] Steady Capital Distributions - Following the 2023 stress test results, Morgan Stanley increased its dividend by 10% to 85 cents per share and re-authorized a $20 billion share repurchase program [5] - As of March 31, 2024, $16.2 billion remains under the buyback authorization, indicating a robust capital and liquidity position [5] Stock Valuation - Morgan Stanley's stock appears undervalued, with price-to-earnings (F1) and price-to-book ratios of 13.69 and 1.68, respectively, below industry averages of 17.28 and 2.39 [6]