The Charles Schwab Corporation (SCHW): A Bull Case Theory

We came across a bullish thesis on The Charles Schwab Corporation (SCHW) on Cosmic Capital’s Substack. In this article, we will summarize the bulls’ thesis on SCHW. The Charles Schwab Corporation (SCHW)’s share was trading at $88.21 as of 9^th June. SCHW’s trailing and forward P/E were 26.73 and 20.83 respectively according to Yahoo Finance.

Charles Schwab (SCHW) is emerging from a turbulent phase with strong momentum, as underlying fundamentals continue to improve across the board. The resolution of the cash-sorting headwind—a period where clients moved idle cash into higher-yielding alternatives—has allowed Schwab to stabilize its funding base and begin paying down expensive debt. This shift has driven net interest margins back toward 3%, lifting net interest income and revealing significant latent earnings power. With this normalization, Schwab is positioned to deliver EPS growth of over 20% annually, a sharp recovery from prior quarters.

The improving trajectory is already visible: client cash levels are rebounding, NIMs are rising, and capital ratios have strengthened, reinforcing confidence in Schwab’s balance sheet resilience. Meanwhile, new accounts and net new assets—key indicators of organic market share growth—are trending close to target levels after a period of integration-related disruption following the TD Ameritrade acquisition.

This recovery has been supported by buoyant equity markets, which serve as a tailwind for Schwab’s asset-sensitive model. Despite operating in a competitive landscape, Schwab’s scale, brand equity, and client service infrastructure offer structural advantages that enhance its ability to win share and retain clients.

Trading at a forward P/E of 19x, the stock offers compelling value given its accelerating earnings profile. Management appears to have room to outperform expectations, making this a timely entry point for investors seeking a high-quality compounder with improving fundamentals, optionality on rate tailwinds, and renewed momentum. The long-term story is intact, and Schwab appears poised for durable growth.

Previously, we covered a bullish thesis on Morningstar from Flyover Stocks, which highlighted its underappreciated moat in data and analytics, founder-led alignment, and long-term outperformance. With strong recurring revenue, institutional stickiness, and a growing need for transparent financial data, Morningstar remains a steady compounder in a crowded field. Morningstar’s thesis centres on its overlooked moat in proprietary financial data and founder-led stability, while Schwab’s emphasizes a post-crisis earnings rebound driven by interest rate normalization and asset growth.

The Charles Schwab Corporation (SCHW) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 102 hedge fund portfolios held SCHW at the end of the first quarter which was 91 in the previous quarter. While we acknowledge the risk and potential of SCHW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.