Charles Schwab's Rollercoaster Month: Buying More Despite Market Losses.
Despite recent downward momentum in its stock price, Charles Schwab's strong deposit franchise and attractive valuation make it a high-risk, high-reward opportunity for investors. The company has seen significant deposit inflows, even during the recent financial crisis, and has significant liquidity to fund withdrawals. While Morgan Stanley downgraded the stock and revised earnings estimates downwards, Charles Schwab's P/E ratio of less than 11X presents an attractive opportunity for investors. However, potential risks include an acceleration of deposit outflows and realized losses from the company's bond portfolio as interest rates rise.
