Summary
- Despite its excellent execution thus far, Charles Schwab remains oversold at the moment, allowing existing investors to further the dollar-cost-average.
- In addition, SCHW stock is now trading attractively below recent insider buys worth $8.15M at an average of $54.
- Combined with its well-diversified offerings that perform well both in low and high-interest-rate environments, we believe these discounted levels are highly attractive for investors looking for a well-run bank/brokerage.
We have previously covered Charles Schwab (NYSE:SCHW) during the recent banking crisis, and concluded that SCHW had been sorely misunderstood. This was due to its position as a brokerage company with value-added banking services. As a result, it managed assets worth $7.38T (-6.1% YoY) as of March 17, 2023, with only 11.7% (-0.2 points YoY) comprising cash, attributed to its clients’ transactional balances from their brokerage accounts. Even if there were any ‘bank runs,’ only 7% of the bank’s checking and savings were at risk then.
In this article, we will be covering SCHW’s performance in the recent FQ1’23 quarter, confirming our thesis that the moderation in its stock prices has been unwarranted. Particularly, its dual-pronged bank and brokerage strategy has allowed the bank to perform well both in low and high-interest-rate environments. We shall discuss this further.
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