Bank of Nova Scotia (BNS.TO)

(Past Top Pick Oct. 18, 2017, Down 10%) They have a large presence in Latin America in a time when emerging markets are under pressure. But this is also a secular growth opportunity. It now lags the Canadian banks, but the laggard in one year often leads it the next.

A higher-beta bank name, because their revenues are mostly in Latin America where there are commodity-based economies and are thus more volatile. But the middle class is growing there, so there's long-term potential. You'll be fine if you have a medium- or long-term horizon, but challenging in the short. It's riskier than its peers. Also, it takes time to digest their recent large acquisitions in wealth management and to benefit from those synergies.

It has not been performing well. The international growth has not been strong. Scotia does not have a strong US franchise. So earnings growth has stalled right now. It is in the penalty box right now because of their recent purchase of money manager firms and dilution of shares.

The worst of the sector, but he bought some yesterday. Their earnings are good and he expects a rate hike next week to boost all Canadian banks. Buy now when it's down. It's an emerging market play, and EM is out of favour, which is a
buying opportunity. Pays a 4.7% dividend.

He sold it, because it disappointed. He prefers TD, RY, and JPM and BAC in the States. He doesn't know why BNS is underperforming.

It is a pretty good long term hold. It recently developed a downward channel. It may hold around $70, as the seasonality kicks in. There are stronger names, however. There are better names to get into right now.

Have been on an acquisition binge. Business is slowing down in the Caribbean. If investing in Canadian banks, half positions only because of inflation and slowdowns in mortgages and the Canadian economy. He isn’t really aggressive with banks because the yield curve is not in their favour.

It is within about 5% of setting a new low. It appears to be the poorest ranked stock in his model. They had problems in the Caribbean.

Been adding to it. BNS has underperformed its peers. Recently did an equity issue to fund acqusition in the global management side. So, its been taking a breather in its stock. Likes Canadian banks which have a good year in reporting. Overhangs were NAFTA and real estate where rising interest rates pressure mortgages. Banks have diversified businesses and are performing well; and are investing in technology. All are raising dividends.

Like any of the Canadian banks he feels they have a place in the portfolio. They have the biggest exposure to emerging markets and that affected them negatively recently given what has been happening in South America. They don’t hold it but think it will do well.

(A Top Pick Aug 11/17, Up 3%) Thinks the market’s wrong, overreacted. Second-largest bank in Mexico, so the new NAFTA should help them. Growth in Central and South Americas should help them. A good time to get in.

Likes it for the international exposure. Excellent longer-term strategy of making acquisitions in Central and South America. Good way to diversify into banking outside of Canada. Yield is better than other banks. Not a bad time to buy. A buy and hold, clip your coupon stock. Yield is 4.5%. (Analysts’ price target is $85.27.)

Generally with NAFTA behind us and LNG being developed, he sees Canada being a favorable investment again – including the banks. BNS-T has been the biggest dog in the bank sector, due to its exposure into some difficult international markets. He likes the valuation the best. It may be time to buy.

It recently took a hit on earnings, because it had bought a large Spanish bank's Chilean operations, making it the second-biggest bank in Chile, and took an immediate writedown, which hit the topline numbers. BNS also bought MD Financial for $2.5 billion as well as investment firm Jarislowsky Fraser for $1 billion, so they issued a lot of stock to cover those. But their yield continues to rise, the highest of the Canadian banks. The rule is buy the worst performer in one year, and it becomes the best performer in the future. (4.5% dividend, Analysts' price target: $85.46)

(A Top Pick October 3/17 Up 0.4%) There was a nice rally from the mid-$70 level earlier this month. Still good value and he continues to be a buyer. Yield 4.4%