The Charles Schwab Corp (SCHW)

Charles Schwab Corporation started as a “Discount brokerage” more than 30 years ago and through decades of innovation, it has become one of the prime brokerage house with more than $1.2 trillion in client assets.

The company is on a total transition from being an online brokerage firm to more of multifaceted online financial institution offering services like advisory, banking, retirement products and mutual funds. Endorsing the same less than 20% of its revenues arise out of trading business making it less venerable to the volatilities of capital market. Less than 2% of the brokerage customer avail other services or form part of the banking community, acting as enormous potential for cross selling.

Divesture of the US Trust seems logical due to its inability to competitively offer products for the high net worth customers to invest in hedge funds and other alternative instruments. With this deal the company hopes to improve its margins, and has sharpened its focus on the individual investors and individual advisors.

The retirement industry is expected to be a $150 billion market by 2012 with $2 trillion of net assets flowing into retirement solutions according to a McKinsey report. In line with this it is acquiring the 401(k) Company, which would provide comfortable retirement solutions with its open investment architecture, fee transparency and client focus. The acquisition of Global Real Analytics would help in delivering powerful real estate research, insights and investment ideas to $2 trillion commercial real estate backed instruments like REITs and other related securities.

The profitability of the bank has improved to 30% in 2006 from a low of 14% with hopes of touching 40% in the next couple of years. The financial health of the company looks good with excellent cash flows. The diversification strategy along with the solid brand name and brand recall owing to the success of the “Talk to Chuck” advertising campaign, all this makes the stock a promising pick for the coming year.

The stock has recovered pretty nicely over the past year, but still does not make many buy lists that I see. I certainly believe in the business over the long term, am a shareholder myself, and think that Schwab can and should be a long-term market outperformer. The increasing popularity (and importance) of do-it-yourself investing is a macrotrend, and I think Schwab remains squarely positioned to benefit.

This comapny has amased a fortune in cash and will seek aquisitions to its core business model. I liked it a year ago at 8 and expect this stock to announce a buy-out soon and to break out above 20 soon.

This is a terrific company that should grow earnings 18% in 08 and 09; earnings should accelerate once economy and investors come back to market; good dividend growth.

From IBD 11/5/07

Unlike some of the biggest names in financial services, Schwab didn't write off any subprime mortgage-related securities or announce layoffs and office closings...New money keeps pouring in. Net new assets added in the third quarter totaled $37.3 billion, up 66% from the earlier year.

Total assets under management grew 7% from the second quarter and 17% from last year to $1.4 trillion. Those assets are invested in mutual funds, money markets, stocks and bonds...

IBD Ratings:
EPS Rating: 91
SMR Rating: A
Overall Rating: 89

Decent results......will take it in this market when everything is heading south! Company has a healthy balance-sheet - pproximately $5 billion in cash and about $11 billion in receivables with very limited debt.

Some exposure in mortgage-backed securities, however, not as significant as it is for the financial institutions.

SCHW should be able to weather this market and come out strong when people start investing their money using companies like Charles Schwab. Like their ads too!

I have to agree with MF! Charles Schwab has been a strong performer for years. I believe they have survived this mess due to the wisdom within their ranks. Yes, Charles' is in charge! I think they can stay ahead of the market with ease. They have landed many millions in new accounts due to consumer confidence. Born Leaders!

June Stock Advisor David Six Month Report Card Rated Buy

Any company that would off-load a business unit and forward the money directly on to me (recent $1 special dividend) is OK in my book. (Full disclosure: opened my first Schwab account in 1976 in San Francisco.)

Near untouched Bank

Total Cash (mrq): 33.31B
Total Cash Per Share (mrq): 28.832
Total Debt (mrq): 881.00M

This company exists for about 30 years. During that period of time it has created the strong, world-famous brand. Would anyone notice of this company vanishes from the world? It’s clear that everyone would, even the most uninformed housewives and those, who don’t trade. This brand creates powerful sustainable advantage. But how was this brand created? Through simplicity, accessibility and easy-to-remember logo. This company became a symbol of discount brokerage and Schwab’s business model is now widely copied. Now, we fools can’t imagine our life with discount brokerage.

- These are the yachts of brokers.

- Where are the yachts of their clients?

This question wasn’t given an answer. In other words brokerage business is the only way to earn money on Wall Street! :)

Charles Schwab offers assets management services with fees significantly lower that Fidelity offers. Company’s strategy is to focus on client loyalty which will lead to organic growth. Charles Schwab’s market share grows every year. Now it equals 23.4% (13% in 1998). During first 9 months of 2006 company repurchased 746 millions common stocks. It means that management believes in future growth of the company and thinks it remains cheap at the current level. In fact, management is very experienced and smart. If the company will continue creating business momentum and will expand its possibilities, client assets won’t just stop at 1.2 trillion levels and will grow and therefore the stock price.

DCF calculator values this stock at around 90-100$. Now it’s is very cheap and it’s time to buy.

Outperform.

How to Find 'Cheap' Stocks With the Enterprise Value-to-EBITDA Ratio

Charles Schwab has recently been conducting a unique and compelling ad campaign to gain new customers for its banking and investing services. As a result of this, I swtiched to Charles Schwab, and have been extremely impressed by their commitment to customers.

I believe that all financial stocks have been taking a beating recently due to economic conditions, however, Charles Schwab's strong effort will pay off in coming years.

We will eventually come out of this economic crisis we're in, and the stock market is known as a leading indicator (i.e., stocks anticipate the economic recovery before it actually happens).

When stocks turn north, people will start scowling at the near-zero returns they're getting in their money market accounts, and will re-enter the market. Schwab will benefit through higher account balances and trading commissions.

Schwab has weathered this storm much better than the other discount brokers, and has been improving customer loyalty through impressive customer service, research, and educational offerings. Their web-based platform, along with their "Streetsmart Pro" application for active traders, keeps betting better and better (I've recently been spending more time on Schwab.com, than at Fool.com!).

A financial that should gain market share as others lose it. Aging Baby Boomers rolling over their IRA's. Great customer service and banking arm didn't get started until subrime ridiculousness was well under way. Chart holding up well under the recent pressure of other financials tanking (again!).

the stock market is close to bottom or on the bottom. It is time to buy the good quality stocks ---- buy and hold. Charles Schwab has a smart managment and in good marketing position.

VL

If you think May Day was bad. These guys are in for a jolt as retail brokerage commissions head to zero. Zecco is just the first of these. Now BofA. Not stocks I want to hold.

I just like the company, it's price is down now, good time to buy.