Stockchase Opinions

Shauna Sexsmith Bank of Nova Scotia BNS-T TOP PICK Sep 08, 2009

Of all the banks, it has the best exposure outside of Canada. Latin America is an underdeveloped market in terms of financial services. ROE of about 19%. Strong Tier 1 capital ratios.
$44.830

Stock price when the opinion was issued

banks
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BUY
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

BNS is certainly a bank that investors like to hate on, and for generally good reason these past few years. After skipping in 2024, we would be quite surprised if it did not raise its dividend this year. Sentiment is low here, and the bank needs to get its act together. Investors would appreciate low, but consistent, dividend increases. It is cheap at 10X earnings with a high yield of 5.72% that is likely quite secure. We can see it as an accumulate. 
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HOLD

Share have gone done, but actually rose in the second half of 2024. The new CEO is unknown, so he's TBD with the market. But so far, there's better performance in key metrics. It takes time to turn around a large company, like 2, 4 or even 10 years. But there's little competition among Canadian banks and you collect a nice dividend as you wait. He's happy to stay the course.

HOLD

Liked it below $65, but recently sold up in the mid-$70s. Looking to add back in, but it has to be sub-$70. Risk/reward here is merely neutral, so it's a hold.

HOLD

New CEO refocusing on domestic operations and on growing deposit base as a source of funding. Will take time, but doable. Attractive valuation, in lower range amongst peers. Nice dividend.

Better to not hold only 1 bank; also consider RY, which is her favourite.

DON'T BUY

New strategy under new CEO made sense in theory, but devil is in the details. Non-controlling position in KeyCorp was a head scratcher. Sold Colombian business, but still invested. Show-me story. 

DON'T BUY

In his opinion, the only quality banks in Canada are RY and NA. Own quality. New CEO has done an excellent job. Results were very good, but had to raise loan losses.

BUY

Nice run, now having a bit of a setback. But that's OK, that's how it goes with the banks. He doesn't mind buying at these levels.

TOP PICK

Worst-performing Canadian bank over the last decade, and that's one of the reasons he likes it. New CEO has freedom to exit under-performing businesses, especially in Latin America. Proceeds are being reinvested in NA. Earnings poised to rise significantly next year as capital gets properly allocated. 

Not expecting outperformance. But yield is 6.11%, and with improvement in growth and other metrics should deliver at least a 10% annualized return for the next 5 years.

(Analysts’ price target is $78.08)
WEAK BUY

He sold ~40-50% of his position at $79-80. Now that it's dropped below $70, considering buying it back. Appealing dividend yield. Not sure correction is over yet because of credit cycle. May try to buy cheaper, but it's a reasonable entry point if you have a very long horizon.

Savvy new CEO's doing quite a decent job. Managing balance sheet well, but he's unsure about 15% acquisition of KeyCorp in US.

Unspecified

The question was on dollar cost averaging for BNS. It is a bank in transition and has had a lot of trouble in recent years. Pays a good dividend of 6%. In general Canadian banks always come back and can be traded.