9 Best Financial Services Stocks To Buy Now

3. The Charles Schwab Corporation (NYSE:SCHW)

Analysts’ Upside Potential: 15.19%

The Charles Schwab Corporation (NYSE:SCHW), a savings and loan holding company, was established in 1986 and offers a range of services, including banking, asset management, wealth management, custody, and financial advising. Investor Services and Advisor Services are its two main business segments.

Charles Schwab became the biggest retail broker in the US by client assets after acquiring TD Ameritrade, which strengthened its offerings for individual investors and improved trading. As of the end of July, Schwab’s total customer assets stood at $9.57 trillion, a growth driven by the increase in new assets. This translates to a 2% monthly rise and a 16% annual increase. Among the monthly accomplishments were 327,000 new brokerage accounts and $29 billion in core net new assets.

Despite mixed earnings dropping the stock price by 5%, the company maintained profitability, increased net margins, and achieved good core net new asset growth in the second quarter of 2024. It is in a favorable position to boost its market share in the quickly expanding direct and registered investment advisor categories because of its affordable and extensive offers combined with an exceptional service culture.

A profit recovery is anticipated in the second half of fiscal year 2024, notwithstanding short-term challenges to revenue and profit brought on by clients moving assets to higher-yielding options. This view is predicated on the expectation of net interest income stabilization and substantial cost reductions from Ameritrade’s integration.

Furthermore, with the normalization of cash sorting activities and the predicted expansion of net interest margin by fiscal year 2025, higher interest rates are likely to move from a headwind to a tailwind for the company, supporting the Buy rating and a target price of $82 by the DBS analyst Ken Shih. The analyst downgraded the price objective for Charles Schwab from $85.00 to $82.00 while keeping a Buy rating.

The Charles Schwab Corporation (NYSE:SCHW)’s strong market position and development potential have led analysts to award the company a Buy recommendation. There are 14 analysts who have collectively rated the stock as a “buy.” The average price objective indicates a possible gain of 15.19% from the current stock price of $65.36.