The Best of Breed Brokerage Company: TD Ameritrade Holding Corp. (AMTD), Charles Schwab Corp (SCHW), or E TRADE Financial Corporation (ETFC)

The Schwab

As of December, Charles Schwab Corp. (NYSE:SCHW) is the largest of the online brokers. They currently serve more than 8.5 million accounts with over $1.9 trillion in assets. They, like TD Ameritrade Holding Corp. (NYSE:AMTD), made a large acquisition when they purchased OptionsXpress in 2011, giving them more exposure to the options market.

The downside to this company is they do not have introductory offers to bring in new clients. Both TD Ameritrade and E TRADE Financial Corporation (NASDAQ:ETFC) offer 60 days of free trading, which is a huge positive when searching for a broker. This was my exact reason for choosing TD over Charles Schwab when I opened my account several years ago. This is a move they need to make immediately.

Charles Schwab’s stock has had a great year so far, up a little over 17%. Earnings are projected to rise 7.3% in 2013, so the stock should continue to rise into 2014. If this stock is to pull back 5%-10%, it may be one to consider.

E TRADE Financial Corporation (NASDAQ:ETFC)

With nearly 3 million accounts and over $200 billion in assets, E*Trade Financial is the third largest brokerage company. This was the most troubled of the brokers during the recession, but they have since fixed most of the problems that caused the instability.

E*Trade was the best performer of the Big 3 this year, gaining over 28.5%, before falling 8.21% on March 14. The drop came after E*Trade’s largest shareholder, the hedge fund Citadel, announced they were selling their entire 9.6% stake. After this sharp move lower, I do not want to touch this company.

The Foolish Bottom Line

Brokerage companies have been on a tear over the last 3 months and should continue to show strength in the years to come. TD Ameritrade Holding Corp. (NYSE:AMTD) is my favorite company in the industry, but Charles Schwab Corp. (NYSE:SCHW) is a close second. E TRADE Financial Corporation (NASDAQ:ETFC) Financial has hit some bumps in the road, so I want to stay away from this one for the time being. We have had a strong market rally over the last few weeks, so I would wait for a few down days to buy any stocks. Keep in mind, 2015’s growth is why I like TD Ameritrade, so this is a long-term investment idea.

The article The Best of Breed Brokerage Company originally appeared on Fool.com and is written by Joseph Solitro.

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