The average U.S. stock is quietly getting crushed. Morgan Stanley says these ones are worth buying now.

While major U.S. equity indexes have held near record levels, that headline strength masks a narrower reality: the average stock has lagged badly. Morgan Stanley attributes this to investors crowding into a relatively small group of market leaders while neglecting broad swaths of the market, including industrials. The result, the firm says, is a widening gap between the index and the typical constituent.

That divergence matters because index performance can overstate overall market health. When gains concentrate in a handful of names, participation thins, and sectors left behind may trade below what their fundamentals would justify. Morgan Stanley frames this as an opportunity — a chance to accumulate overlooked companies at depressed valuations rather than chase crowded leaders.

For investors, the takeaway is less about any single recommendation than about market breadth. Watch whether lagging sectors begin to participate, whether earnings support the cheaper valuations, and whether concentration persists. Breadth improving would suggest a healthier rally; continued narrowing would keep the risk of disappointment tied to a few large stocks.