In an uncertain macroeconomic environment, as markets react to the risk of recession, higher tariffs and inflationary pressures, comes Charles Schwab $SCHW as a stable player with an attractive combination of defensive and upside potential. Morgan Stanley has responded by raising its recommendation to "overweight," which implies an above-average expected return relative to the market.

• 47% of revenue is net interest income
• The firm benefits from high interest rates without the need for large trading volumes

Schwab $SCHW Generates solid profits even with lower investor activity. At a time when the market is stagnant, that's a big advantage.

• The firm is paying off nonperforming loans from the "run on cash" era in 2023
• Expected EPS growth: +20% per year (2025-2026)

Why it matters:

Reducing the cost of debt directly improves margins. Schwab increases efficiency and profitability without growing its client base.

• Low sensitivity to market fluctuations
• Higher client cash balances strengthen liquidity
• Client base remains loyal even in uncertain times

Advantage:

In a slowdown environment, $SCHWis a "safe haven" but with growth potential due to its own restructuring.

Charles Schwab $SCHW isn't just a defensive play to "survive" the recession - it's a transforming firm that is quietly optimizing its finances and preparing for a return to strong earnings growth. That makes it deserving of a place in the portfolio of any investor who wants to preserve capital in the current uncertainty but not lose growth potential.