Should I Buy Charles Schwab Company (SCHW)? Finance YouTuber Analysis

The speaker finds Schwab interesting, suggesting it's a favorable financial stock.

“Um Schwab Schwab looks interesting. I like the exchanges. I think they're cheap.”

The YouTuber suggests buying Charles Schwab Company (SCHW) and other regional banks, anticipating a rebound as interest rates decline. Regional banks were hit hard by rising interest rates, which devalued their bond portfolios. As rates come down, bond portfolios will recover, balance sheets will improve, and deposits will return, leading to a rebound in these stocks.

“We did see a very strong Rebound in the regional Banks though big winners last week with eight of the top 10 stocks in the entire index in the S P 500 from the financial sector most of those hardest hit from last March saw big bounces Zion's Bank Corporation took her Zion was up 17 more than 17 percent Charles Schwab company was up 14 last week alone the overall group still in the red here want to show you a year-to-date chart with a spider s p Bank ETF ticker kbe in red down 10.8 percent so far this year the Spyder Regional Bank ETF ticker kre here in purple it's down 20 for the year still even after last week's big run-up in prices if we are seeing some kind of healthier balance sheets some kind of Rebound in these banking stocks which I believe once interest rates start coming down you're going to see a lot of the a lot of the balance sheets improve for these Regional Regional Banks you're going to see deposits start coming back and I think it's going to continue that rebound in these shares”

The YouTuber advises avoiding Charles Schwab despite its attractive valuation and potential 12% IRR, due to a critical flaw in its balance sheet. He highlights a negative tangible book value of $9.4 billion if held-to-maturity securities were marked to market, posing a significant risk of bankruptcy if there were a run on the bank. While acknowledging the company's ability to borrow, the negative book value and interest rate sensitivity make it too risky at current prices.

“I think I would like to see the stock price come down more before I buy it even though it's expected to produce more than a market beating return the negative Book value for me is a little too much and I would like to see them sure of that a little bit more.”