The scars of the August plunge are still fresh for many traders. Even with the market rebounding and making back all the ground it lost, not many investors or stocks were left unscathed. Unless of course you take a look at a chart of Charles Schwab Corp. (SCHW).
The three-month chart looks like a pleasant stroll higher without the whiplash the rest of the market experienced. And if you look at a much longer chart—in the three-year range—things look even better. It’s a downright beautiful march from $12 to $29.
Charles Schwab has certainly had its share of pull-backs, but the stock always seems to find a way to claw itself back up to life-time highs.
The big driver behind this is that the big institutions have never wavered on this stock; at least as far as the last three years are concerned. Institutional ownership of Charles Schwab is very strong at about 75% of the outstanding shares for 3-years running. The company has also posted solid earnings for the last year meeting or beating each estimate in the last 12 months. The most recent earnings report was also very good. Net income increased by 27% compared with last year and net revenue was up by 11%.
With all of these positives on Schwab’s side I give it a fundamental score of 56 out of 100—not too bad. SCHW gets lots of points for key metrics like stock price, return on equity, year-to-year earnings growth, year-to-year revenue growth, quarter-to-quarter earnings growth and quarter-to-quarter revenue growth.
And the technicals look even better to me. I give the stock a score of 85 out of 100. Volume is strong, and I also like how Charles Schwab has outperformed both its Industry and Sector over the last 90 days.
If you think this market is going higher, this is a good way to safely profit from the uptrend. If you think there’s any chance of another August plunge—or worse—SCHW is exactly the kind of stock you want to own.
The stock looks to have some solid momentum behind it and if this market can continue to move higher, as I expect it to, SCHW could do quite well. Overall I think Charles Schwab Corporation is a great buy with a solid long-term outlook. The current bull mode of the market is the perfect environment for this company to flourish.
I recommend entering this trade at $30.50 or less and setting a stop at $26.91.
