Do You Believe in the Sustainable Earnings Growth of The Charles Schwab Corporation (SCHW)?

The London Company, an investment management company, released “The London Company Large Cap Strategy” third quarter 2024 investor letter. A copy of the letter can be downloaded here. U.S. equities increased during the third quarter, with most major indices recording mid-single-digit gains. The broader market, represented by the Russell 3000 Index, rose by 6.2%. Notably, there was a shift from large-cap growth stocks to small-cap and value styles. The portfolio increased 8.2% (8.1% net) during the quarter compared to a 6.1% increase for the Russell 1000 Index. Both stock selection and sector exposure were tailwinds to the relative performance of the strategy. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.

The London Company Large Cap Strategy highlighted stocks like The Charles Schwab Corporation (NYSE:SCHW) in the third quarter 2024 investor letter. The Charles Schwab Corporation (NYSE:SCHW) is a savings and loan holding company that offers wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The one-month return of The Charles Schwab Corporation (NYSE:SCHW) was 6.91%, and its shares gained 29.89% of their value over the last 52 weeks. On November 5, 2024, The Charles Schwab Corporation (NYSE:SCHW) stock closed at $71.31 per share with a market capitalization of $130.45 billion.

The London Company Large Cap Strategy stated the following regarding The Charles Schwab Corporation (NYSE:SCHW) in its Q3 2024 investor letter:

“The Charles Schwab Corporation (NYSE:SCHW) – SCHW underperformed the broader market as the company reported an optically bad quarter, though with little implications on company fundamentals. Cash sorting from consumers continued in the latest quarter and has persisted longer than we anticipated. We believe that an end to SCHW’s headwinds are near, especially as the Federal Reserve shifts to cutting rates, and consequently, we expect a strong rebound in earnings power within the next 18 months. Longer term, we believe SCHW is well positioned to continue capturing market share and driving sustainable earnings growth.”

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The Charles Schwab Corporation (NYSE:SCHW) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 72 hedge fund portfolios held The Charles Schwab Corporation (NYSE:SCHW) at the end of the second quarter which was 71 in the previous quarter. The third quarter revenue of The Charles Schwab Corporation (NYSE:SCHW) increased 5% year-over-year to $4.8 billion. While we acknowledge the potential of The Charles Schwab Corporation (NYSE:SCHW) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed The Charles Schwab Corporation (NYSE:SCHW) and shared Baron Asset Fund’s views on the company. Madison Investors Fund’s Q3 2024 investor letter noted that The Charles Schwab Corporation’s (NYSE:SCHW) higher funding costs are impacting short-term earnings, but the company is gaining market share. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.