| Skyrocketing interest rates have become a major headwind for consumers, corporations and the stock market. But not for the financial services firm that we're evaluating today, which is a major beneficiary of rising rates. Yet, despite the company seeing rising rates drive earnings higher, its share price is down this year! Because a bear market takes no prisoners... This company provides online brokerage services for retail customers and works with registered investment advisors through its institutional services platform. It has grown to become a very big business. In total, it now manages an astounding $6.6 trillion worth of assets. But the company's business model is highly sensitive to interest rates. It makes money much like a bank. It pays customers a modest amount for cash they have on deposit. Then it earns a profit by reinvesting that cash at higher rates. While a bank mainly reinvests that cash by lending it out as mortgages and other loans, this company simply invests it into risk-free Treasurys. The zero interest rate policy of the Federal Reserve in recent years has been a big drag on this company's earnings. It hasn't been able to earn a decent profit margin reinvesting customers' cash. Now, this year has been a different story. The return that it can earn by holding Treasurys has gone up exponentially. Let's look at the U.S. five-year Treasury bond, for example, which started this year paying 1.25%. It now offers 4.36%. As I said, an exponential increase! The company's financials reflect this improvement. And that's why its stock is undervalued. | 
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