When it comes to price performance, growth stocks have blown value stocks out of the water over the past decade -- even during this current recession. Several growth stocks have had such a great run that they are now overpriced and a stock price bubble is threatening to burst. At least that's what some experts are predicting.

To mitigate the potential troubles of a bubble burst, long-term investors should also be looking on the value side of the fence for good stocks that are undervalued and poised to grow. One of the stocks I'm looking at right now that fits that bill is Morgan Stanley (MS -0.40%). Let's see why this banking giant might be the next stock worth buying for your portfolio.

Morgan Stanley had a very good year

Morgan Stanley had a good year in 2020, all things considered. The stock price was up 38% in 2020 and the company made some strategic investments and acquisitions that should sustain its growth into the future. At the same time, it remains a great value with a price-to-earnings ratio of just 11 and a price-to-book value of 1.64. These numbers are around the historical averages for the past 10 years, but given the strategic moves the company has made, it is a better value than usual right now.

A couple looking at a laptop screen, smiling.

Image source: Getty Images.

The most recent earnings numbers bear that out. The company posted record revenue of $48.2 billion in 2020, a 16.4% increase over 2019, and net income of $11 billion, or $6.46 per share, a 22% increase over 2019. The institutional services business -- which encompasses Morgan Stanley's investment banking and trading operations -- had a record year with $25.9 billion in revenue, a 27% increase year over year. The investment banking segment had the biggest revenue increase, 46%, due to an increase in M&A transactions and a record year in underwriting.

"In response to the COVID environment, the year saw a rolling opening of markets beginning with debt and rescue financing, next with equity, and very recently, leveraged loans and corporate M&A financing," CFO Jonathan Pruzan said on the fourth-quarter earnings call. Also, the investment banking pipeline is robust as M&A activity has accelerated and there is a "strong backlog from IPOs, driven by leadership in healthcare and technology and follow-on activity, notably in the Americas and Asia."

According to a recent report by Bloomberg, Morgan Stanley was second to only Goldman Sachs in investment banking market share in 2020, at 27%.

The best is yet to come for Morgan Stanley

To build on this strength, Morgan Stanley made two strategic acquisitions in 2020. It closed on a deal to buy E*Trade in October, which will bolster its wealth management business. With 3.3 trillion in wealth management assets, it becomes the largest player in the U.S. in that sector.

The wealth management segment saw revenue climb 7.3% to $19.1 billion for the full year 2020, and the added scale and distribution capabilities of E*Trade will definitely help it grow.

The company also acquired investment manager Eaton Vance to enhance its third revenue stream -- the investment management business. When the deal closes later this year, Morgan Stanley will have $1.2 trillion in assets under management, adding about $500 billion from Eaton Vance. Eaton Vance brings complementary strengths, such as separate accounts through its Parametric subsidiary and ESG investing through its Calvert subsidiary.

Morgan Stanley has improved its efficiency as well, with an expense efficiency ratio of 68% in the fourth quarter, down from 75% in the fourth quarter of 2019. In addition, the company had a return on tangible common equity of 17.7% in the fourth quarter, up from 13% in the fourth quarter of 2019. For the full year, it was 15.2%, including integration-related expenses, up from 13.4% in 2019.

To me, it all adds up to a stock that is a great buy.