Among the biggest winners in Friday’s early trading are Charles Schwab (Nasdaq: SCHW), Goldman Sachs (NYSE: GS) and Biovail (NYSE: BVF).

Schwab turns the Corner

After a string of disappointing quarterly results, Charles Schwab (Nasdaq: SCHW) finally has something to brag about. Second-quarter sales rose +10% sequentially, and the company’s operating profit margin finally moved back up above 30% after several lean years. The company slightly beat estimates, pushing shares up more than +6% in Friday trading. Equally important, the discount broker continues to add new clients at a rapid clip. The earnings power that Schwab will derive from that rising client base will be in evidence when interest rates start to rise, as Schwab generates nice margins on its various money-market funds.

To get a deeper look at Schwab’s prospects, StreetAuthority’s Frederick Steier laid out a solid bull case for Charles Schwab here, and I laid out the long-term view in this column.

Action to Take –> After rising sharply in the 1990s, shares of Schwab have been dead money in the most recent decade. This new decade should bring much more cheer. When you account for eventually rising earnings from a more typical interest rate environment, per-share profits could eventually exceed $2.00. Shares, at a recent $15, greatly discount that potential.

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Goldman’s Gentle Slap on the Wrist

When the U.S. Securities and Exchange Commission (SEC) first decided to pursue an investigation into Goldman Sachs’ (NYSE: GS) business practices, investors braced for potential fines approaching $1 billion. We looked at the situation in early May, and opined that “a fine in the $500 million to $1 billion range is not inconceivable, which would likely only represent around 1% of the company’s market capitalization.” Well, in a settlement announced Thursday evening, the two sides agreed to settle the case with a fine at the lower end of that range. Shares rose +3% on Thursday in anticipation of the deal, and are up another +2% on Friday, on a day when almost every other stock is in the red.

#-ad_banner-#Shares had risen +9% in Thursday after-market trading, and probably would have been up that much in regular Friday trading were it not for today’s market rout. Why the positive response? Because investors know that the fine is a pittance for a company that made $13 billion last year. And more important, Goldman was not restricted in its future business dealings, as some had feared. Goldman agreed to require two internal committees to vet complex deals linked to residential mortgages, and also agreed to run all marketing materials through its legal department (which, by the way, is simply standard business practice in the securities industry).

Action to Take –> It’s unclear if all of these developments will tarnish Goldman’s reputation among clients. When the SEC indictment was first handed down, several firms took their business elsewhere. And Goldman still needs to deal with a welter of civil lawsuits. But the securities industry has a very short memory, and if Goldman can appear sufficiently chastened to its clients, then the long-term fallout should be limited.

Notably, shares trade for just above tangible book value, and could eventually trade back up to $200, or about 1.5 times book — the industry’s typical multiple. Yet in the near-term, investors should wait to see how the shareholder and client lawsuits play out before jumping in.

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Piper boosts Biovail

Shares of Biovail (NYSE: BVF) are up more than +3% — and are one of the few stocks in the black with market capitalizations above $1 billion — on the heels of a ratings and price target upgrade from Piper Jaffray. Shares had already traded up nearly +30% in the last month on the heels of a well-received merger announcement with Valeant (NYSE: VRX). Biovail’s stock will be the surviving equity.

Action to Take –> In going from “neutral” to “overweight,” Piper boosted its price target from $16 to $25, implying +20% to +25% upside from current levels.