Since September, Charles Schwab Corp.’s (SCHW) stock has been marching higher, setting new highs as the financial sector takes off, from an investing perspective.
But that doesn’t mean the discount broker doesn’t have room for additional growth, with some technical analysts saying it’s more about when it happens instead of if it does. The reason: They point to technical charts that indicate that there have been a lot of opportunities for the stock to go lower that never materialized. That is signaling that the bears are being drowned out by the bulls, which should bode well for Charles Schwab. (Interested in trading? Read Investopedia's Charles Schwab review.)
It doesn’t hurt that the company’s third-quarter earnings report is slated for Oct. 16, which could result in positive news. For the three months ended in September, Wall Street is looking for earnings of $0.41 a share and revenue of $2.19 billion, which is higher than the earnings of $0.39 a share and revenue of $2.13 billion the company reported for the second quarter. In the year-ago second quarter, Schwab posted earnings of $0.30 a share and revenue of $1.8 billion.
But it’s not just a good quarterly earnings report that should help the stock climb higher. With President Donald Trump and Republicans touting an overhaul to the tax code, it should be positive for the discount broker and other players in the financial sector. Charles Schwab may not have much money overseas to repatriate at a lower rate—if that aspect of tax reform is successful—but if taxes do get reduced, Schwab stands to benefit. What’s more, since it doesn’t have much money outside of the U.S. it won’t get hit if the U.S. dollar continues to weaken. (Use Investopedia's broker reviews to find a broker to match your investing goals.)
On the industry front, Charles Schwab is among the top players when it comes to providing digital investment advice, known as robo advice. With that market expected to take off, it means more business for the incumbents, including Schwab, Vanguard and Fidelity. The trio is expected to see their market share increase to 93% by 2021, compared to the 78% they had in 2016, according to a recent research report from Aite Group, a Boston consulting firm. The number of people looking for digital advice is expected to skyrocket 850% to 17 million people in the same time frame. Recently, shares of Charles Schwab were up $0.09 or 0.20% to $44.13. The stock is more than 7% higher since the start of the year.