Jim Cramer Says ‘Maybe This Is The Quarter Where People Will Finally Look At The Future And How Fabulous The Charles Schwab Corporation (SCHW)’s Franchise Really Is’ - InvestingChannel

Jim Cramer Says ‘Maybe This Is The Quarter Where People Will Finally Look At The Future And How Fabulous The Charles Schwab Corporation (SCHW)’s Franchise Really Is’

We recently compiled a list of the Jim Cramer is Talking About These 14 Stocks Before Earnings. In this article, we are going to take a look at where The Charles Schwab Corporation (NYSE:SCHW) stands against the other stocks Jim Cramer is talking about before earnings.

As earnings season kicks off, Jim Cramer of Mad Money offered insights on what investors should watch in the coming week on Wall Street. He highlighted the anticipated reports from several major banks, along with a few other companies, as key events to monitor.

Cramer expressed optimism about the current market conditions, noting that the situation aligns with his previous predictions that the market would thrive once the Federal Reserve began reducing interest rates while the economy remained strong. He remarked on the spectacular earnings reported by some major banks on Friday, emphasizing that this positive news is particularly impactful now, as opposed to previous instances when the Fed was tightening, causing good news to go largely unnoticed. Cramer believes that with the Fed now supportive of the market, there is potential for more favorable times ahead.

Looking to Monday, Cramer predicted that the focus will shift away from earnings reports due to other significant developments over the weekend. He mentioned the anticipated unveiling of a Chinese stimulus package and noted that although the rally in China has stalled, it could regain momentum if the Chinese government injects substantial funds into real estate and the stock market.

“Now, on Monday, we won’t be focused on earnings. There’s a lot of other stuff happening over the weekend. For instance, I think we’ll be parsing the Chinese stimulus package that’s going to be unveiled. The China rally is stalled, but it can get rolling again if the Chinese Communist Party keeps throwing tens of billions of dollars for the stimulus at real estate, at the stock market.”

Cramer warned that the financial sector will face a significant test on Tuesday, as different banks will be reporting their earnings. Cramer reminded investors that we are just at the beginning of one of the year’s four reporting periods, which can be chaotic and open to various interpretations.

“We’re at the beginning of one of the year’s four reporting periods,” he said. “They’re jumbled. They’re open to a lot of interpretation. They’re fast. So listen to the calls, ponder a moment, and only then should you pull the trigger.”

Our Methodology

For this article, we compiled a list of 14 stocks that are slated to release earnings this week and were discussed by Cramer during his episode of Mad Money on October 11. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.

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 275% since May 2014, beating its benchmark by 150 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: 72

Cramer thinks that the company has a few problems but they are in the past. Talking about The Charles Schwab Corporation (NYSE:SCHW), he remarked:

“Schwab’s one of the largest retail brokerages in the country, but its last few quarters have been greeted quite poorly. Bond portfolio issues… issues involving cash sweeps. I think these problems are past tense, and this situation is compelling, but I feel very lonely. Maybe this is the quarter where people will finally look at the future and how fabulous Schwab’s franchise really is. I can’t be sure, but they should.”

Charles Schwab (NYSE:SCHW) is a financial services provider, offering various solutions that include wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. As of August 31, 2024, the company reported 35.9 million active brokerage accounts, along with 5.4 million workplace plan participant accounts and 1.9 million banking accounts. The total client assets under management reached an impressive $9.74 trillion.

In September, Charles Schwab (NYSE:SCHW) shared a business update that outlined that its third-quarter performance is progressing in line with expectations, highlighting strong net new asset growth. In August alone, it reported net new asset growth of $32.8 billion, representing an increase of $4.9 billion compared to August of the previous year. The growth occurred amid expected client attrition in advance of a major client conversion weekend, which marks one of the busiest transition periods for the company throughout the year.

Additionally, the company noted a decrease in transactional sweep cash, with client funds awaiting investment declining from $371.8 billion in July to $366.8 billion in August. It was a significant improvement over the figures recorded in August of both 2023 and 2022.

Overall SCHW ranks 7th on our list of the stocks Jim Cramer is talking about before earnings. While we acknowledge the potential of 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 more promising than SCHW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

 

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

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