Bank of Nova Scotia (BNS.TO)

This is the only Canadian bank they own. This is the most international bank in Canada, with more assets being owned outside of the country. These assets are not in the US. It has been hitting recent lows. When it sold its CI holdings, getting out of mutual funds, they have been buying a large asset manager and a private client business focusing on physician investors. The problem is the market feels they may have overpaid for these investments. Yield 4.4%. (Analysts’ price target is $86.40)

It trades at a discount to the major banks, has a better yield and has done some smart wealth management acquisitions. Yield 4.4%. (Analysts’ price target is $86.40)

(A Top Pick Aug 30/17, Down 1%) They have been on a flurry of acquisitions here and internationally. This should be additive to their earnings. They have a foot in Mexico and this held it back. He owns it happily.

He doesn’t own any Canadian Bank now for the risk in the housing sector. Exposure in Latin America positions them OK for growth in the long-term but created headwinds for their earnings in the short-term. Probably a buying opportunity at some point. He has put it on his radar screen.

He likes it beacuse it's only 50% Canadian. His rule is to buy the weakest-performing Canadian bank in a given year, that bank becomes the best bank 12-14 years in a row. That's BNS now, which has had a pullback due to a large purchase and an equity issue. So, BNS trails the other banks. But he sees a reversion to the mean--and his rule. Their international business is going great and BNS has avoided the worst turbulence in Latin America. Its earnings are growing double-digits in the past few quarters.. (Analysts' price target: $86.40)

Why has TD outperformed BNS in the past year? Hes warming up to BNS now. It has a good valuation, though he likes TD very much. BNS suffers from NAFTA talks and Latin American exposure, where some countries suffer
hyperinflation and struggling economies. That said, you can sell another Canadian bank and buy BNS now.

Disclosure: He was involved in the recent equity issue. Often, a stock can trade down after an equity issue. His biggest and favourite Canadian bank holding is TD, but BNS has the most room for improvement. He likes them building their
wealth management side.

It's focused in Latin America, a good growth profile for BNS, but there's risk and volatility in these countries. The banking systems in those countries are less mature and have weaker governance. BNS has done a good job trimming costs and made several big asset purchases like MD Management. It's a good company.

It's broken an up trendline. That doesn't mean it's bearish. It's been sideways, range-trading. He doesn't see a big rally coming up. BNS is exposed to Latin America and Argentina has some issues with debt and deficits--their peso is
plunging. This has partially triggered the recent sell-off. He would lighten his holdings.

This company has reported great earnings but it is down. He doesn’t know why. There is a significant concern about consumer debt levels and mortgage levels and this will depress the price of the Canadian bank stocks. He expects the dividend to grow a bit but doesn’t expect much capital appreciation. He expects that TD and Royal Bank should trade better than Scotia because they have expanded in the US more than Scotia.

It is trading right on a technical support line with lots of upside potential. (Analysts’ target: $88.54).

Several banks have reported great earnings, but the stock price has not reflected that. This would be a good buy right now. Their earnings have been good and it is one of their core holdings. He thinks it is a better holding than TD-T, who has spent a lot to acquire new US markets. Yield 4.4%

(Past Top Pick on May 15, 2017, Up 10%) They've had some good quarters and he expects the next one to be too. He sees another 10% return in the next 12 months. He likes it for its low Canadian exposure, becase he's worried about the Canadian consumer.

Has to be a core holding in his portfolio. He has to like it. All the banks are good. You can pick and choose. He likes what they have been doing. Ups and downs on good volume as the other banks. He likes that it is more international than the others.

All Canadian banks suffer uncertainty from housing bubble fears and so are performing weaker compared to the US banks. In Canada, he'd buy Bank of Nova Scotia for their Latin American exposure, because of the strong growth in those countries.