Typically, the stock market doesn’t mind when a company announces layoffs. In a bull market, it can be a sign that a company is finding ways to do the same (or more) work with fewer people. But in a bear market, it’s often treated as bad news, even as it lowers costs.
That’s particularly true in financial markets, where companies can be quick to hire and quick to right-size when the market changes.
Right now, the market has sold off shares of Morgan Stanley (MS) following its latest layoffs amounting to 2 percent of staff. But the bank has been holding up well. Despite rising interest rates this year, the company has held up well.
Revenues are down 12 percent overall, but the bank has maintained a fat 23 percent profit margin. And shares trade inexpensively at just 12 times forward earnings.
Action to take: Shares of the bank will likely move to make new highs when the bear market ends. Until then, Morgan Stanley offers a 3.4 percent dividend yield with room to grow in the years ahead. That makes shares worth accumulating now, and on any down day for the markets.
For traders, the April 2023 $95 calls, last going for about $3.80, can likely deliver mid-double-digit gains on the next rally day for shares without having to wait months until expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.