We recently published a list of 14 Best Holding Company Stocks to Buy Right Now. In this article, we are going to take a look at where The Charles Schwab Corporation (NYSE:SCHW) stands against other best holding company stocks to buy right now.
The Treasury Yield Market
The treasury yield has been moving towards its lowest point in a month following a comment from the Treasury Secretary, Scott Besson. The secretary suggested that the new administration is focused on the 10-year treasury and its yield, rather than the Fed cutting interest rates. On February 6, Ed Mills, Managing Director at Raymond James, appeared in an interview on Yahoo Finance to discuss his outlook on the market amid new economic, political, and tax policies.
Mills reiterated a very important factor raised in the Secretary’s speech the day before, suggesting that the Trump tax cuts from 2017 were to be made permanent, adding $4 trillion to debt and deficit over the coming 10 years. He added that the policies also desire to cut tips and social security taxes, now bringing the total debt and deficit to $5 trillion. Mills suggested that the debt and deficit were so huge that it would be extremely challenging for the government to keep the “long end of the curve down.”
Why Value Investing is the Way to Go
In another interview on March 5 on Yahoo Finance, Michael Sonnenfeldt, founder and chairman at TIGER 21, shared his market thesis amid changing macroeconomic and political trends. He shared that while turmoil and confusion are encapsulating the market, his clients remain very strong, emphasizing his inclination towards value investing. He also added that his members are finding significant value in private equity and the private real estate industry.
He suggested that while a lot of indicators in the market point towards a possible rotation from growth into value, he remains cautious about the changing conditions, reiterating that it is currently very challenging to find value in the market environment. Sonnenfeldt added that focusing on the fundamentals of equities is of crucial importance at the moment, rather than company momentum, amid volatile economic and political conditions. He shed light on his member’s buying strategy, which happens to be entirely focused on the basics of a stock, emphasizing that others should follow suit.
While some stocks pose a risk due to the current market conditions, some stocks, especially those with strong fundamentals and long-standing businesses, offer greater protection and certainty.
Our Methodology
To come up with the 14 best holding company stocks to buy right now, we went over similar rankings on the internet and compiled an initial list of 20 stocks. We then examined the hedge fund sentiment around every stock and picked the most popular ones. Our list is in ascending order of the number of hedge funds, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A corporate finance professional studying a financial performance chart.
The Charles Schwab Corporation (NYSE:SCHW)
Number of Hedge Fund Holders: 91
The Charles Schwab Corporation (NYSE:SCHW) is a financial services company that offers commercial banking, investment management services, wealth management, consulting, brokerage services, and retirement services. As per its latest update in December 2024, the company serves 36.2 million accounts with full-service investing and banking services across the globe. In addition to that, as of December 2024, SCHW had $10.31 trillion in client assets. Some of its subsidiaries include Charles Schwab Asset Management, OptionsXpress, Charles Schwab Trust Bank, and Family Wealth Alliance, LLC, to name a few.
In the fourth quarter of 2024, the company generated net income worth $1.8 billion and added $114.8 billion in core net new assets. In addition to that, The Charles Schwab Corporation (NYSE:SCHW) witnessed a 20% hike in its revenue compared to the fourth quarter of 2023. Similarly, new brokerage account openings increased by 23% year-over-year to 1.1 million, with active accounts reaching 36.5 million. In an impressive feat, its managed investing solutions segment recorded net inflows of $15 billion, bringing the full-year total to $55 billion.
Overall, SCHW ranks 8th on our list of best holding company stocks to buy right now. While we acknowledge the potential of SCHW as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SCHW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.