Charles Schwab Stock Is A Big Money Favorite

So, what’s Big Money? Said simply, that’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And Charles Schwab has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the shares have been trading points to more upside. As I’ll show you, the Big Money has been consistent in the shares for all year.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the big money signals SCHW has made the last year.

The last few weeks have seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price:

Chart, histogram

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Source: www.mapsignals.com

In 2021, the stock has attracted 15 Big Money buy signals. Generally speaking, recent green bars could mean more upside is ahead.

Now, let’s check out technical action grabbing my attention:

  • YTD outperformance vs. Financial Select Sector SPDR Fund (+9.26% vs. XLF)

Outperformance is huge for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, Charles Schwab has been growing sales & earnings rapidly. Take a look:

  • 3-year sales growth rate (+10.87%)
  • 3-year earnings growth rate (+13.25%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, SCHW has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock saw buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

SCHW has a lot of qualities that are attracting Big Money. And in 2021, it’s made this list 2 times, with its first appearance on 3/2/2021… and gaining 15%. The blue bars below show the times that Charles Schwab was a top pick:

Chart, histogram

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Source: www.mapsignals.com

It’s been a top stock in the financials sector according to the MAPsignals process. I wouldn’t be surprised if SCHW makes additional appearances in the years to come. Let’s tie this all together.

The Bottom Line

The Charles Schwab rally could have further to go. Big money buying in the shares is signaling to take notice. Shares could be positioned for further upside. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds no position in SCHW at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer

https://mapsignals.com/contact/

For a look at all of today’s economic events, check out our economic calendar.

Interactive Brokers Launches Cryptocurrency Trading

U.S. clients of the brokerage will now be able to trade and custody bitcoin, ethereum, litecoin and bitcoin cash alongside stocks, options, futures, bonds, mutual funds and exchange-traded funds, the company said.

“As financial markets evolve, sophisticated individual and institutional investors are increasingly seeking out allocations to digital currencies as a means of achieving their financial objectives,” said Chief Executive Officer Milan Galik.

Chairman Thomas Peterffy said in June that Interactive Brokers, which caters to active traders and sophisticated investors, would launch trading in cryptocurrencies by the end of the summer as the nascent asset class becomes more mainstream.

Other brokers, including Robinhood Markets Inc and TradeStation also provide cryptocurrency trading, while Charles Schwab Corp and Fidelity currently offer access to bitcoin futures.

Crypto-trading commissions at Interactive Brokers will be 0.12% to 0.18% of trade value, depending on monthly volume, with no added spreads, markups, or custody fees, the New York-based company said.

Interactive Brokers said it partnered with Paxos Trust Company, a regulated provider of cryptocurrency services that also works with companies like PayPal on digital asset trading, to enable the new service.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by John McCrank; Editing by Marguerita Choy)

 

Robinhood Takes Investors on Roller Coaster Ride

The paint has barely dried on trading app Robinhood’s IPO, and the stock has already taken investors on a roller coaster ride. Shares are down more than 16% today on the heels of Wednesday’s monstrous rally in which the stock advanced more than 50%. The new stock is still managing to hover above its offer price of USD 38.

Love/Hate Relationship

The narrative surrounding Robinhood’s stock has been just as dramatic as its price swings as the love/hate relationship with investors continues. On social media, some users are convinced that Robinhood has morphed into a meme stock in its own right, which is ironic considering its history placing trading restrictions on these names.

Most recently, the broker has revealed via an SEC filing that stockholders are poised to offload more than 97 million Class A shares. These investors include the likes of Andreessen Horowitz, 9Yards Capital, Ribbit Capital and others. Some of the investors on the list include those that bailed Robinhood out early in the year when it needed collateral for the surge in meme stock trading volume. Robinhood won’t receive any of the proceeds from the selling.

Retail investors who have flocked to the stock could be left holding the bag if they are not careful.

Dividend Divide

Robinhood competes with other discount brokerage platforms, including the likes of Etrade, TD Ameritrade and Charles Schwab, to name a few.  Shares of Schwab have been on a tear in 2021, having seen their value increase by nearly one-third year-to-date. Schwab also pays a dividend of USD 0.18 per share.

One investment firm that has benefited from Schwab’s performance this year has been Sydney, Australia-based Lakehouse Capital. Even though Schwab “is not a household name in Australia,” as the firm points out, it’s the largest discount brokerage in the U.S. By holding the stock in its Global Growth Fund, Lakehouse’s Robinhood position generated returns of 100% for fiscal 2021, making it the top performer in the investment vehicle.

While Schwab pays a dividend, Robinhood does not. In its S-1 filing, Robinhood revealed that paying a dividend is not a priority for the company for a couple of reasons:

  • Management plans to direct funds and earnings toward developing and growing the business.
  • Credit-facility terms restrict it from doing so.

While Robinhood is selling off today, the leading meme stocks that the broker is often remembered for are rising, including GameStop and AMC Entertainment.

Marketmind: “A Ways Off” and That’s Good

You couldn’t call China’s data dismal — average growth actually surpassed Q1 while June retail sales and industrial output beat expectations. But it does show authorities, who last week unleashed one trillion yuan into the financial system, will ensure conditions stay loose.

But markets’ delight after Powell told Congress he saw no need to rush the shift towards tighter post-pandemic monetary policy, has not lasted long.

World stocks are off recent record highs, tempered possibly by spiking COVID-19 cases across Asia and signs the post-pandemic bounce in company earnings is hitting a peak.

Asian shares rallied, led by a 1% rise in Shanghai but U.S. futures are mostly lower, with the exception of the tech-heavy Nasdaq. European markets too, are opening weaker and 10-year Treasury yields are down at 1.33%, almost 10 basis points off Wednesday’s high point.

The news from the corporate world is all good — the four biggest U.S. banks, Wells Fargo, Bank of America, Citigroup and JPMorgan have posted a combined $33 billion in profits. Asset manager BlackRock beat estimates, with assets at a record $9.5 trillion.

Omens in Europe are good too, with Sweden’s SEB, carmaker Daimler and food delivery firm Just Eat all reporting buoyant earnings. And earlier in Asia, Taiwanese chipmaker, TSMC, posted an 11% rise in Q2 profits.

Key developments that should provide more direction to markets on Thursday:

– South Korea held rates but signalled pandemic era record-low interest rates was coming to an end

-UK added 356,000 jobs in June

-ECB Board Member Frank Elderson speaks

-Philly Fed index

-Bank of England interest rate-setter Michael Saunders speaks

Fed events: Powell testimony continues, Chicago Fed President Charles Evans speaks

US earnings: BNY Mellon, Charles Schwab, US Bancorp, Morgan Stanley, Alcoa

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sujata Rao; editing by Dhara Ranasinghe)

 

Best ETFs For June 2021

A portfolio of outlier stocks can become chock full of monster gains for years to come, if chosen wisely.

But wouldn’t it be great if there was already a collection of outliers we could buy without even having to think about it?

Well maybe there is a way to do just that… through outlier ETFs.

So, here I’m going to give you the best ETFs that big money is getting involved in this month.

First thing’s first: to find them, I looked at all the ETFs making Big Money signals. I did that by heading over to MAPsignals.com and then looked at the Big Money ETF Buys and Sells chart. I looked at days with the biggest buying, circled here:

Once I had all the ETFs, I wanted to know which were the best potential opportunities. ETFs are baskets of stocks. And because MAPsignals scores over 6,000 stocks every day, as long as I know which stocks make up the ETFs, I can rank them all.

Here are the 5 best ETFs with scores: The Composite score, Technical score, and Fundamental score. These were computed by accounting for each components stock’s score and its associated weighting in the ETF. (keep in mind that weightings will change from time to time)

Below we see each ETF, their recent Big Money activity, and their scores. XLF, ITB, and XLC are top ranked ETFs. That makes sense because financials, home builders, and communications stocks have been leading the market much of this year so far.

IGV and ARKG, however, rank low on our list of ETFs. But there is opportunity here because the low scores are due to weak technicals. Big Money has been selling these ETFs, largely because they are heavily concentrated in growth stocks. But these stocks have excellent fundamentals: growing sales and earnings and big profits. These weak ETFs represent great potential bargains.

Let’s quickly look at the year-to-date performance of these 5 ETFs:

  • XLF +29.3%
  • ITB +29.2%
  • XLC +13.5%
  • IGV -4.0%
  • ARKG -18.1%

Now let’s quickly look at Big Money buying in the ETFs. Each chart below has many green bars which represents unusually large buying. The few red bars represent unusually large selling. What jumps out is the huge buying in all the ETFs.

Only with IGV and ARKG, there was recent selling too. But again, selling on ETFs and stocks with great fundamentals represents a value opportunity.

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

Here’s why I like these ETFs: they are highly concentrated with fundamentally superior stocks. Below we see a table of three stocks in each ETF. They are some of the highest weightings in each.

Notice their fundamental scores are very strong on a scale from 0-100. This means strong growing sales, earnings, and profits over one and three years. This is how MAPsignals boils down all its fundamental research into one elegant score.

Now with XLF, ITB, and XLC – we see the stocks also have strong technical scores. That means Big Money has been pouring into them, lifting them to new highs. They are buoyant with Big Money support. But in IGV and AKG, we see weak technical scores. This means Big Money has been exiting the stocks.

But before you get spooked, let’s keep the recent environment in mind: Growth has fallen out of favor while value and reopen stocks have become all the rage. But it’s essential to remember these growth companies create phenomenal products and services enhancing our lives. I don’t foresee that stopping in the future. The recent selling is temporary and thematic.

What really drives this home is looking at how long-term Big Money buying can lead to monstrous gains. Below are charts showing all the instances these stocks were Top stocks in our research since 2015: our weekly report of outliers. We don’t need to go into details on each chart.

I’d like you to notice a few things:

  • When Big Money buying pours in, stocks go up
  • Repeated outliers, especially for years often means outsized gains

Owning outlier stocks is the way I try to beat markets. Easy exposure to many stocks can be achieved by buying ETFs. But just like anything, you must be in the 1% if you want to be in the 1%.

We can find outlier ETFs by tracking the Big Money. But that alone isn’t enough: when we catalog the components and find outlier stocks underneath… that’s the winning recipe.

So, there you have it: the 5 best ETFs that Big Money has been trafficking in recently. Outlier ETFs hold outlier stocks. Finding them is the key to finding potentially outlier gains.

Now let’s look at what those look like:

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

The Bottom Line

XLF, ITB, XLC, IGV, & ARKG represent top ETFs for June 2021. Financials, homebuilders, & Communications stocks have performed well lately, which should continue. Software and Genomics companies have reached interesting levels, too. Paying attention to the fundamental quality of ETF constituents is paramount.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions GOOGL, CRM, & REGN in managed accounts, but no positions in XLF, ITB, XLC, IGV, ARKG, BLK, SCHW, SPGI, DHI, LEN, LOW, FB, ATVI, ADBE, MSFT, TDOC, & VRTX at the time of publication.

Investment Research Disclaimer