Charles Schwab's (SCHW) stock got crushed last March as part of the across-the-board selloff we saw in regional bank stocks. While the stock has managed to rally nicely off the lows set during that turbulent time period, I believe it is still being undervalued by the market, opines Nate Pile, editor of Nate’s Notes.
To be sure, Schwab is most definitely a “financial services” company that offers some of the same services one might find at a regional bank. However, the reality is that it is NOT a regional bank, and yet its stock was (and, to a certain extent, is still being) punished by the market as if it is one.
Whenever I see these sorts of situations where perhaps “a baby has been thrown out with the bathwater,” so to speak, it often means there is substantial upside for investors who are willing to put their emotions aside and look at the long-term picture instead.
While it is quite possible the stock could trade down in sympathy with the regional banks if investors start to worry about that sector again, this is another situation where I especially like the risk-reward ratio we are currently being given. Provided one is disciplined about scaling-in to a position over time, SCHW is considered a strong buy under $62 and a buy under $70.
