Trade-Ideas: Charles Schwab (SCHW) Is Today's Momo Momentum Stock
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.Trade-Ideas LLC identified Charles Schwab (SCHW) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Charles Schwab as such a stock due to the following factors:
- SCHW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $234.7 million.
- SCHW has a PE ratio of 32.5.
- SCHW is currently in the upper 30% of its 1-year range.
- SCHW is in the upper 25% of its 20-day range.
- SCHW is in the upper 35% of its 5-day range.
- SCHW is currently trading above yesterday's high.
- SCHW has experienced a gap between today's open and yesterday's close of 0.4%.
'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.EXCLUSIVE OFFER: Get the inside scoop on opportunities in SCHW with the Ticky from Trade-Ideas. See the FREE profile for SCHW NOW at Trade-IdeasMore details on SCHW: The Charles Schwab Corporation, through its subsidiaries, provides securities brokerage, banking, money management, and financial advisory services to individuals and institutional clients. The company operates through two segments, Investor Services and Institutional Services. The stock currently has a dividend yield of 1.1%. SCHW has a PE ratio of 32.5. Currently there are 4 analysts that rate Charles Schwab a buy, 4 analysts rate it a sell, and 8 rate it a hold.The average volume for Charles Schwab has been 10.8 million shares per day over the past 30 days. Charles Schwab has a market cap of $27.5 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.61 and a short float of 4.3% with 4.44 days to cover. Shares are up 51% year to date as of the close of trading on Friday.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.TheStreetRatings.com Analysis:TheStreet Quant Ratings rates Charles Schwab as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.Highlights from the ratings report include:
- SCHW's revenue growth has slightly outpaced the industry average of 6.0%. Since the same quarter one year prior, revenues slightly increased by 8.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 35.39% is the gross profit margin for SCHWAB (CHARLES) CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.79% is above that of the industry average.
- Compared to its closing price of one year ago, SCHW's share price has jumped by 65.07%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- SCHWAB (CHARLES) CORP's earnings per share declined by 10.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SCHWAB (CHARLES) CORP reported lower earnings of $0.69 versus $0.71 in the prior year. This year, the market expects an improvement in earnings ($0.73 versus $0.69).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, SCHWAB (CHARLES) CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- You can view the full Charles Schwab Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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