The Charles Schwab (SCHW), mcap=$139bn, price $73.35 vs $67.00

$SCHW pitch:
– Online brokerage for retail customers and provider of services for RIAs.
– Set to benefit from:
(1) asset gathering tailwinds for electronic brokerage firms, attracting net new client assets of $20-60bn each month;
(2) Inflation and higher interest rates as it sweeps clients’ excess cash into its bank;
(3) massive synergies from its TD Ameritrade acquisition, management estimates these at $4.3-4.8bn.
The company is accelerating capital returns with increased dividends and $15bn buyback authorization.
– CEO / co-Chairman recently made a $9.5m open market purchase.

$SCHW valuation:
– Trades at 13x ’24 PE, with historical fwd PE multiple in the range of 15x-25x.
– At 20x ’24 earnings of $5.5/share, would be $110 stock.

Exp. gain: +60% to $110/share.

Full $SCHW write-up (free guest account required):

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