Charles Schwab Corp (SCHW)

He likes the financial sector. This company has used technology to make the customer experience better. Over 40% of their earnings come from simple net interest margins on deposits. Asset management fees account for another 40% and it grew by 56% per year. This company is able to drop prices, but still increase earnings. Yield 0.7%. (Analysts’ price target is $60.78 )

He really likes financials. This is a play on a resurgent private client investor. Their new assets last year grew 58%. 40% of earnings come from net interest margin, the money they make holding cash for their clients, and they are a clear winner for rising rates. They get 40% from asset management. As client assets grow, their fees grow. As new money comes in, their fees grow. They were the 1st to start a big Robo advisor in the US. This is a growth company that benefits in a number of different ways. Dividend yield of 0.8%. (Analysts' price target is $61.33.)

The chart shows this is still going up, but something that is still a little concerning is that it has kind of gone up parabolically in the last little while. At worst, he thinks it is going to want to pause. A really good space to be in. He would look for it to go sideways before it continues on. This is one he would hang onto. It's part of the pro-growth theme.

Retail and private investors are becoming more engaged with markets. There was $700 trillion in wealth created last year in the US. This company has about 10 million accounts, and are opening 100,000 accounts a month. 1% growth a month is not so bad. Their asset management and advisory business is growing very nicely. They have about $3 trillion in clients’ assets and hold a tremendous amount of cash. As rates go up, the margins they make is very, very good. Dividend yield of 0.6%. (Analysts' price target is $50.)