Investor Jenny Harington said she sees a clearer earnings story in Charles Schwab than big technology names that others have rushed back to this year. Harrington said on CNBC’s “Halftime Report” that she’s recently bought shares of the Westlake, Texas-based financial stock, which she said has been unfairly beaten down as people “freaked out” over March’s regional bank crisis. Though Schwab is down nearly 30% this month, and 35% this year, Harrington said the company is still bringing in new assets and is showing continued earnings growth — with further growth expected in coming years — despite trading below its historic price-to-earnings multiple. “To me, this is exactly what I want to own right now, with respect to earnings clarity,” said Harrington, CEO of Gilman Hill Asset Management. “Maybe we shouldn’t use the word safe, but that’s a safer trade. To me, there’s much more comfort in moving money there and out of tech than there would be to just go back to the tech stocks that, I think, have inflated value.” Buying Schwab comes at the same time as Harrington trimmed some well-known technology holdings, bringing both Meta and Palo Alto down to about 2.5% from 3.5% within her growth portfolio. Meta shares have gained more than 70% so far this year but, after slumping 64% in 2022, is still more than $100 below where they ended 2021. Meanwhile, Palo Alto shares now trade above where they ended 2021 after climbing almost 38% this year to make up for 2022’s 25% decline. “They’ve really gotten their love,” she said of the two tech names. “A year ago, six months ago, they were underappreciated. Now they’re well appreciated.” META PANW YTD mountain Meta and Palo Alto year-to-date While other investors have rushed back to large-cap tech, Harrington said she finds the stocks hard to like because it’s more difficult to figure out what their earnings should be to then decide if the price she’s buying at represents a discount, plus it’s tough to discern their earnings outlook. “It’s really, really, really hard to see where growth is coming,” Harrington said. “For me, when you’re saying, ‘What’s the safety trade?,’ and I’m saying I don’t like the mega-caps because I don’t even know what their earnings really should be.” “I would almost say it’s like the lazy trade,” she added. “It’s people running back to what, you know, gave them a good ride for a long time and they say, ‘Oh, well, I know I’ve got my Apple iPhone and I know I’m using it, so I’m just going back to what took care of me in the past.'”
