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

We came across a bullish thesis on The Charles Schwab Corporation on CosmicCapital’s Substack’s Substack by CosmicCapital. In this article, we will summarize the bulls’ thesis on SCHW. The Charles Schwab Corporation’s share was trading at $94.00 as of October 6th. SCHW’s trailing and forward P/E were 24.92 and 17.27 respectively according to Yahoo Finance.

10 Chinese Tech Stocks to Buy Now

Charles Schwab Corporation (SCHW) is positioned to benefit from a normalization in cash balances following a period of elevated deposits, allowing the company to pay down higher-cost debt and improve net interest margins (NIMs) to around 3%. This dynamic is expected to lift net interest income and unlock latent earnings potential, supporting EPS growth of over 20% in FY25. Operationally, the integration of TD Ameritrade has been largely absorbed, and key indicators such as new accounts and net new assets are returning to near-target levels, signaling a recovery in market share.

Strong equity markets have provided an additional tailwind, boosting trading activity and supporting the balance sheet. The company’s capital ratios have improved alongside stronger liquidity, positioning Schwab with a robust foundation for both growth and risk management. From a valuation perspective, SCHW trades at a forward P/E of 18x, reflecting solid earnings growth and operational momentum, although much of the stock’s upside from prior cash accumulation and market tailwinds has already been realized. While the company continues to demonstrate resilience and attractive profitability, potential risks remain from lower interest rates and equity market volatility, which could temper future returns.

Overall, Schwab presents a stable investment opportunity with ongoing EPS growth and a strengthened balance sheet, though investors may weigh its current valuation against alternative opportunities that offer a more favorable risk/reward profile. The combination of recovering market share, improving NIMs, and strong capital positioning underpins a constructive medium-term outlook, making the stock a Hold/Buy in the context of broader market conditions.

Previously we covered a bullish thesis on Morningstar, Inc. (MORN) by Flyover Stocks in May 2025, which highlighted its strong moat in Data & Analytics, steady growth, and under-the-radar status. The stock has depreciated approximately by 25% since our coverage due to broader market volatility. The thesis still stands as Morningstar continues to benefit from deep financial expertise. CosmicCapital shares a similar approach but emphasizes Charles Schwab’s operational recovery and earnings potential.

The Charles Schwab Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 100 hedge fund portfolios held SCHW at the end of the second quarter which was 102 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 doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SCHW and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW

Disclosure: None.