Bank of Montreal (BMO.TO)

The banks are looking quite expensive, especially as we're probably entering a period of economic weakness. Good company, not a good stock at the moment. Past quarter has seen a pretty stellar move. Trades ~14x PE. Yield is 4.3%.

Definitely take some profit, and stick it into something more defensive like infrastructure, pipelines, utilities. Things that will outperform in a market and economic downturn. 

Banks are very resilient and recession-ready. Credit risks have gotten a lot more manageable. Our regulatory regime is robust. Better trading in volatile times kind of shelters them. If looking to put capital to work, the sector is trading at 10.8x PE, with 8% EPS growth, yield is 4.4%.

His favourite one in the group, best bank for the buck. Trades near the peer multiple, best growth rate. Really good upside. 

Likes footprint in US since the Bank of the West deal. Third-biggest bank in Canada, one of the top 15 in US. Great Canadian wealth management, and great NA capital markets business. Pretty good, but smaller, insurance business. Management presented a pretty credible plan to drive ROE back to mid-teens. 

Trading around 1.3x book value, scope for that to rerate higher as they get the bulk of credit loss provisioning behind them this quarter or next (may even already be behind them). After that, earnings growth can start to reaccelerate. Yield is 4.45%.

Beware of conflating tariffs and politics with the direct fundamentals of a business, especially a bank, even though sometimes those things can intertwine. This name is a bi-coastal US bank, and a Canadian more-commercially-skewed bank. Mid-large cap bank, with businesses north and south of the border; but it doesn't mean they interrelate too much.

Better US and better Canadian economy are good for BMO. But tariffs don't have a direct impact. Risk to BMO is about in the same proportion as to the other Canadian banks. If Canadian consumer weakens, so will commercial credits. That's a worry, along with a US slowdown. Interesting at the right valuation.

Got crushed at the start of the year. Current share price not very expensive. Dynamic US business. Really good CEO. As long as you take a multi-year view, doesn't see how you can possibly go wrong.

Likes their growth in the US. At the time, he also owned TD, but ditched it when they got in legal trouble with money-laundering before their growth got capped. (He bought RY instead.) BMO has had some integration problems with a western bank, but still likes they have a growth market in the US. Now, all banks are in a funk because of the trade war and a potential consumer slowdown. Doesn't expect big moves up by the banks unless Trump throws in the towel. Long term, this is good, but banks won't soar short term.

All banks are at risk if economy darkens. But if economic environment is OK, he thinks BMO has the best upside. Most exposure outside the US. Good valuation.

Looking at the chart, the 50-day MA and the 200-day have converged. It's trying to find support right here, right now. The price doesn't have to fall, the indicators can just soften as the market works through the oversold level. If it doesn't hold, it would certainly be a buy amidst the congestion between $104-130. 

Among Big 6 in Canada, more exposed to commercial lending. Commercial highs are higher in US, but lows are also higher, than in Canada. Extra credit provisioning is behind them. Likes synergies from Bank of the West. Excellent wealth franchise and growing. Formidable capital markets business is growing quickly. Strong balance sheet. Nice dividend will probably grow.

A good day to buy, despite tariffs.

Don't buy it today but it has been a great stock to trade. It is the most volatile of the big 5 banks due to the commercial banking component. The stock (not the bank) is more vulnerable to recession.

Tariffs have spurred a flight to safety, and banks can be a good place to be. Level of resistance going way back to 2022, and the stock decided to fall when it reached that level again. Things happen for a reason, investors have memories.

The question is: How much selling will take place? Not a prediction, but worst-case is pullback to ~$130; a 50% chance or greater that it will do that. A near-term trader like him would probably sell now, get back in later. A long-term, buy-and-hold investor would probably just accept the fluctuation.

Possibly the most attractive bank today. Adding recently on its valuation discount. Likes banks with a very strong Canadian position. Trades at 1.2-1.3x book.

A much better choice for new money than TD right now.

A good place to deploy profits from other names.

Biggest bank weighting he has. Fits the bill for a long-term buy and hold, collect the dividend. Likes the expansion potential in the US. Some indigestion with BOTW, but kitchen-sinked the last quarter and stock surged.