FX.co ★ Three companies resilient to changes in Fed’s policy
Three companies resilient to changes in Fed’s policy
In early 2021, the stock of Charles Schwab, one of the world’s largest financial companies, showed a great performance, jumping by 53% amid increased investment activity. Last year, the company acquired its rival, TD Ameritrade, thus expanding its business. Charles Schwab offers various banking services and access to online trading as well as capital management consultancy. Some company’s programs were developed specially for both individual and institutional clients. In the autumn of 2021, the company had $7.1 trillion in client assets. Some analysts suppose that shares of Charles Schwab may advance if the Fed raises the benchmark rate. In the third quarter, the organization published a strong earnings report, which unveiled higher than expected revenue amid the mounting demand for the company’s products. In the given period, Charles Schwab’s profit surged by 75% to $0.84 per share, whereas sales volume jumped by 87% on a yearly basis to $4.69 billion. At the same time, its net profit totaled $1.53 billion that is 119% more than in 2020. Since the beginning of the year, shares of Charles Schwab have appreciated by 53.3%. In the fourth quarter, the number of new accounts exceeded 1 million.
Comerica is the second company resilient to the Fed’s decisions. This year, one of the largest US banks has shown perfect financial results amid increased economic activity, stable growth in lending volumes, and smaller loan losses. Comerica provides $85 million of equity and offers banking services to clients from commercial and consumer sectors. The company specializes in investors’ capital management. Since the beginning of 2021, its shares have added 49.9%, increasing to the record level of $91.62 from $55.86 on a yearly basis. Economists think that investments in the company’s stock may bring a good profit since the yield on short-term obligations may advance just after the US regulator tightens its monetary policy. According to the financial results for the third quarter of 2021, the company’s revenue and profit were well above the forecast thanks to the growth of assets boosted by clients’ deposits and a stable income in the form of commission payments. In just several months, Comerica raised its dividend payments and expanded the share purchase program. According to the plan, from January 1, 2022, the company’s management will pay $0.68 per share every quarter, whereas the annual profit may reach 3.32%.
NVIDIA closes the list of three companies whose shares will hardly suffer from higher interest rates. NVIDIA is one of the largest producers of graphics processing units for the gaming and professional markets. The company also specializes in chip units for data centers and self-driving vehicles. As a result, the company’s stock is among the leaders of 2021. NVIDIA has also benefited from the appearance of the metaverse and a rapid development of this new segment. Since the beginning of the year, the company’s shares jumped by 117.1%. It is one of the most expensive companies in the US stock market. Some experts think that the company is a unique growth asset. However, changes in the Fed’s benchmark rate are unlikely to influence its stock. High profitability and a significant liquidity cushion will allow the company to survive the period of tightening of the Fed's policy without losses. In the fourth quarter of 2021, NVIDIA’s profit advanced by 60% to $1.17 per share, whereas sales volume rose by 50% to $7.1 billion. In the third quarter, revenue from the video game segment, NVIDIA's main sphere, totaled $3.2 billion. Sales for data centers soared by 55% to $2.9 billion. Experts at INVIDIA foresee that in 2022, the company’s revenue may increase by 48% on a yearly basis to $7.4 billion.