{"id":13088,"date":"2023-05-24T08:33:15","date_gmt":"2023-05-24T12:33:15","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/charles-schwab-stock-has-an-84-upside-potential-to-its-pre-inflation-peak\/"},"modified":"2023-05-24T08:33:16","modified_gmt":"2023-05-24T12:33:16","slug":"charles-schwab-stock-has-an-84-upside-potential-to-its-pre-inflation-peak","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=13088","title":{"rendered":"Charles Schwab Stock Has An 84% Upside Potential To Its Pre-Inflation Peak"},"content":{"rendered":"<div>\n<p>Charles Schwab stock (NYSE: SCHW) currently trades at $52 per share, around 46% below (84% upside) its level of $96 on January 15, 2022 (pre-inflation shock high), and seems like a good investment opportunity. Charles Schwab saw its stock trading at around $63 at the end of June 2022, just before the Fed started increasing rates, and is still 18% below that level. In comparison, the S&amp;P 500 gained about 11% during this period. The stock price has suffered over recent months due to the fear of a banking crisis after the collapse of Silicon Valley Bank. This was despite a decline in the inflation rate in response to the Fed\u2019s aggressive rate hike plan and consistent growth in <strong data-ga-track=\"ExternalLink:https:\/\/www.trefis.com\/data\/companies\/SCHW\/no-login-required\/PYgxl1zk\/Charles-Schwab-Revenues-How-Does-SCHW-Make-Money-?fromforbesandarticle=trefis230524\">Charles Schwab\u2019s revenues<\/strong><strong><u>. <\/u><\/strong><\/p>\n<p>Returning to the pre-inflation shock level means that SCHW stock will have to gain more than 84% from here. However, we do not believe that will materialize any time soon, and estimate <strong data-ga-track=\"ExternalLink:https:\/\/www.trefis.com\/data\/companies\/SCHW\/no-login-required\/cLqqHkuJ\/Charles-Schwab-SCHW-Valuation-Is-SCHW-Stock-Expensive-Or-Cheap-?fromforbesandarticle=trefis230524\">Charles Schwab\u2019s valuation<\/strong> to be around $66 per share. This is because the recent uncertainty in the financial sector has made investors concerned about a potential recession.<\/p>\n<p>Our detailed analysis of <strong data-ga-track=\"ExternalLink:https:\/\/www.trefis.com\/data\/companies\/SCHW\/no-login-required\/oWrhfMSs\/Charles-Schwab-During-2008-Recession-vs-2022-Inflation-Shock-SCHW-Stock-Has-84-Upside-If-It-Recovers-To-Pre-Inflation-Shock-Levels-?fromforbesandarticle=trefis230524\">Charles Schwab\u2019s upside post-inflation shock<\/strong> captures trends in the company\u2019s stock during the turbulent market conditions seen over 2022 and compares these trends to the stock\u2019s performance during the 2008 recession.<\/p>\n<p><strong>2022 Inflation Shock<\/strong><\/p>\n<p>Timeline of Inflation Shock So Far:<\/p>\n<p><fbs-ad position=\"inread\" progressive=\"\" ad-id=\"article-0-inread\" aria-hidden=\"true\" role=\"presentation\"><\/fbs-ad><\/p>\n<ul>\n<li>2020 &#8211; early 2021: Increase in money supply to cushion the impact of lockdowns led to high demand for goods; producers unable to match up.<\/li>\n<li>Early 2021: Shipping snarls and worker shortages from the coronavirus pandemic continue to hurt the supply<\/li>\n<li>April 2021: Inflation rates cross 4% and increase rapidly<\/li>\n<li>Early 2022: Energy and food prices spike due to the Russian invasion of Ukraine. Fed begins its rate hike process<\/li>\n<li>June 2022: Inflation levels peak at 9% &#8211; the highest level in 40 years. S&amp;P 500 index <strong>declines more than 20%<\/strong> from peak levels.<\/li>\n<li>July &#8211; September 2022: Fed hikes interest rates aggressively &#8211; resulting in an initial recovery in the S&amp;P 500 followed by another sharp decline<\/li>\n<li>Since October 2022: Fed continues rate hike process; improving market sentiments help S&amp;P500 recoup some of its losses<\/li>\n<\/ul>\n<p>In contrast, here\u2019s how SCHW stock and the broader market performed during the 2007\/2008 crisis.<\/p>\n<p><strong>Timeline of 2007-08 Crisis<\/strong><\/p>\n<ul>\n<li>10\/1\/2007: Approximate pre-crisis peak in S&amp;P 500 index<\/li>\n<li>9\/1\/2008 &#8211; 10\/1\/2008: Accelerated market decline corresponding to Lehman bankruptcy filing (9\/15\/08)<\/li>\n<li>3\/1\/2009: Approximate bottoming out of S&amp;P 500 index<\/li>\n<li>12\/31\/2009: Initial recovery to levels before accelerated decline (around 9\/1\/2008)<\/li>\n<\/ul>\n<p><strong>SCHW and S&amp;P 500 Performance During 2007-08 Crisis<\/strong><\/p>\n<p>SCHW stock declined from nearly $22 in September 2007 (pre-crisis peak) to below $13 in March 2009 (as the markets bottomed out), implying SCHW stock lost almost 43% of its pre-crisis value. It recovered post the 2008 crisis to levels of around $19 in early 2010, rising 48% between March 2009 and January 2010. The S&amp;P 500 Index saw a decline of 51%, falling from levels of 1,540 in September 2007 to 757 in March 2009. It then rallied 48% between March 2009 and January 2010 to reach levels of 1,124.<\/p>\n<p><strong>SCHW Fundamentals Over Recent Years<\/strong><\/p>\n<p>SCHW revenues increased 9% from $10.7 billion in 2019 to $11.7 billion in 2020 due to higher trading volumes. Further, revenues jumped 58% in 2021, partly due to organic growth and partly because of the acquisition of TD Ameritrade. The trend continued in 2022, with top-line increasing by 12% y-o-y.<\/p>\n<p>Similarly, earnings increased from $2.69 in 2019 to $3.52 in 2022 driven by revenue growth. However, SCHW reported a $2.13 per share earnings in 2020, down y-o-y, when the pandemic impacted its expenses.<\/p>\n<p><strong>Conclusion<\/strong><\/p>\n<p>With the Fed\u2019s efforts to tame runaway inflation rates helping market sentiments, we believe Charles Schwab stock has the potential for strong gains (84% upside) once fears of a potential recession are allayed.<\/p>\n<p>What if you\u2019re looking for a high-performance portfolio with a low downside instead? Here\u2019s a <strong data-ga-track=\"ExternalLink:https:\/\/www.trefis.com\/data\/companies\/PORTFOLIOS\/no-login-required\/BPo8U0Xc\/Reinforced-Value-Portfolio-with-439-Return-Since-2016-vs-87-for-S-P-500?fromforbesandarticle=trefis230524\">reinforced value portfolio<\/strong> that has beaten the market consistently while limiting losses during periods of sharp market declines.<\/p>\n<p>Invest with <strong>Trefis <\/strong><strong data-ga-track=\"ExternalLink:https:\/\/dashboards.trefis.com\/data\/companies\/PORTFOLIOS\/no-login-required\/M7MacZNG?fromforbes\">Market Beating Portfolios<\/strong><\/p>\n<p>See all <strong>Trefis <\/strong><strong data-ga-track=\"ExternalLink:https:\/\/dashboards.trefis.com\/data\/price-estimates?fromforbes\">Price Estimates<\/strong><\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.forbes.com\/sites\/greatspeculations\/2023\/05\/24\/charles-schwab-stock-has-an-84-upside-potential-to-its-pre-inflation-peak\/\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Charles Schwab stock (NYSE: SCHW) currently trades at $52 per share, around 46% below (84% upside) its level of $96 on January 15, 2022 (pre-inflation shock high), and seems like a good investment opportunity. Charles Schwab saw its stock trading at around $63 at the end of June 2022, just before the Fed started increasing [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":13089,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-13088","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Charles Schwab Stock Has An 84% Upside Potential To Its Pre-Inflation Peak | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Charles Schwab stock (NYSE: SCHW) currently trades at $52 per share, around 46% below (84% upside) its level of $96 on January 15, 2022 (pre-inflation\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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