Bank of Montreal (BMO.TO)

He is comfortable with most of the companies in the financial sector right now. He likes BNS, then Royal, then TD and then BMO and CIBC. You could own any one of them or an ETF that has all of them.

BMO is third on their list. They have done a great job of building their US franchise. They are not trading at an expensive multiple. Room for these to tread water or move higher and collect the dividend. The bigger concern is looking out 2 – 3 years to see where the growth is going to come from.

He likes banks in general. If you look at banks, 80% of their return since 2010 have come on the second half of the year. There are signs of stability in Canadian housing markets. This one has better growth prospects than its peers and in line valuations. ROE is the highest its been in 4 years. Relatively drama-free. (Analysts’ price target is $111.26)

They own Royal Bank (RY-T) and TD (TD-T). They changed the CEO recently. It has done a good job in the last while. The problem with Canadian Banks is the they are not as cheap as the US banks. The good thing is that they continue to grow their dividends and are very well capitalized. Owning here it is fine. Great ROE.

He does not own any Canadian banks. He looks at the level of consumer leverage and the economy. They have been good stocks over the long term but he thinks going forward there are better opportunities to invest money.

TD-T vs. BMO-T. Canadian banks have been underperforming the US. There are still some challenges here in Canada, such as less interest rate increases. The changes in real estate laws are still working through the market place. He would underweight Canadian banks.

They increased their dividend. U.S. operations are attractive and they are expanding them. Better U.S. growth helps them. A good stock. Ranks BMO #4 of the big Canadian banks after TD, RBC and SB.

Long-term investors who have just held Canadian banks have made out like bandits. They’ve compounded rates of double digits and dividend growth, and he doesn't see that ending. Canadian banks should trade at more than 13X earnings. The overall market is trading at 19X earnings. He likes Canadian banks and feels you should overweight them in your portfolio.

The worst performing bank in a year is a good one the following year. It has decent US exposure. He favours US banks so if you want US exposure from a Canadian bank this would be a good one.

You should be fine owning this. It is not his preferred Canadian bank. If he had to choose, he would probably pick Toronto Dominion (TD-T) or Royal (RY-T) because of the big exposure to the US. All the metrics on this bank look okay, but he would choose more US financials.

Has an ROE slightly below 14%, which is why it would trade at a lower Price to Book multiple of 1.6X. The bank has bought its way into very competitive markets, mainly in the US and things like commercial banking. It would not be the bank he would buy, but doesn’t see any particular risk in owning it. Doesn’t feel you are going to get a lot of performance above the group.

With a one year horizon, it is too hard to forecast. Over the long term the new management team has a strong leader with a capital markets background and a cost cutting initiative. It is not attractive today but is long term. The critical question is the success of the Harris Bank integration. BMO has been having trouble with growth but this is a long term opportunity.