Bank of Nova Scotia (BNS.TO)

(Past Top Pick on Oct. 3, 2017, Up 0.7%) Rising interest rates and tightening mortgage rules worry some investors, but he's positive on the Canadian banks. Sure, the banks aren't as cheap as they were 12 months ago, but they are diversified and can weather the storm. He's happy to hold this as a core position.

It is not the cheapest but it has been going along on a technical support level for some time. All of the banks make him a little concerned, so if he gets a 5% sell off, he would use that as a sell signal. (Analysts’ target: $89.43).

$800 million spent to put the company name on a sports facility? Generally, it's not a good idea, except ACC in Toronto. He's not a fan of Canadian banks. The American banks are growing faster. He doesn't like the idea of putting a company name on a sports buildings. He would avoid this stock.

Price has fallen recently. Double-down? Don't sell. It's a general pull-back, though BNS fell more than the other Canadian banks. BNS has a Latin America stake, and those economies can be more volatile. An uncertainty
with this sector is how Canadian housing will unfold. But the Canadian banks enjoyed a strong Q1. She would add to positions here. Also, rising interest rates will benefit the banks.

He once worked here. If there's a sell-off in EM, BNS may see some exposure. More importantly, rising interest rates are a worry, because Canadian consumers are levered to the gills. Also, how far will consumers accept high bank fees before pushing back? But this is fine, if you hold this for 3 or 4 years.

BNS-T vs TD-T Comment. He owns both of these and feels bullish on both of them. He holds a slightly greater weight in BNS-T, who is exposed more to the developing market segment with faster GDP growth. TD-T has an expanded footprint in the US with the recent acquisition of Ameritrade.

Scotia had good earnings. Their Canadian side fine and wealth management is growing. International side is coming back nicely after a tough period in 2008-9. There's some concern with their Mexican bank because of NAFTA troubles, but Scotia should overcome this. They will continue to grow their dividend.

He doesn’t own this. Likes banks that have good exposure to the U.S. Scotia’s numbers were strong, they’re doing well in South America, but he would prefer TD or Royal.

They are looking to expand. They want more money and clients under their command. There is a risk of overexpanding -- banks often do stupid things when they have a lot of money coming in, resulting in huge writedowns. Therefore he would not buy any of the Canadian banks at this time. They are making a tremendous amount of money, but they have gone up that he questions whether the increase is sustainable. It has been a great investment so far but at some point it is a good idea to take profits and put money on the sidelines.

It has been under performing in recent years. He would be a buyer. It is trading at a discount to its peers. It is not his favourite, however.

[A TOP PICK] Lost its premium valuation recently partly due to exposure to Mexico which makes 6% of their profits and NAFTA talks are an uncertainty. But since Porter has taken over as CEO, BNS has become more efficient as it puts more money in technology. With rising rates, banks should so well. Also, loan losses have not spiked. 4.05% yield. (Analyst's price target is $89.14.)

Bank of Nova Scotia (BNS-T) or Royal Bank of Canada (RY-T)? He actually suggests a basket of banks. Maybe an ETF works here. If you have to prefer one name, he would pick TD Bank (TD-T)

All the Canadian banks are cheap, but likes Scotia especially because now 25% of their business is now fully outside North America to Latin America and southeast Asia which are good growth markets with growing middle classes that need loans and wealth management. Boasts 10.5x earnings. Growing dividend and a history of growing it. Just spent $1 billion buying Jarislowsky Fraser which has $40 billion of assets under management. Baffled why Scotia isn't trading at a higher multiple. (Analysts' price target $89.27)

If looking for a place to go today, he might look at this because of their international exposure. If we are going into a better commodity cycle, given their south American exposure, this could do very well. Management has been sinking a lot of money into information technology, because there is a big competitive landscape out there.

It is 50% non-North American. They are looking to sell Thailand operations. They made an acquisition in Chile that looks quite good. He thinks they will catch up later in the year. You might get 10% total return.