Bank of Nova Scotia (BNS.TO)

What do you think of having a global diversification with an emphasis on growing within the countries where they already operate? This is the international bank in Canada and he likes it. This strategy makes sense, because if you already have your logistics set up it makes sense to consolidate. The bulk of their operations are in the Western Hemisphere, which gives them the opportunity to get more growth.

Model price $74, 16% upside. He thinks it goes to $72.40 first so would nibble here.

National Bank (NA-T) or Bank of Nova Scotia (BNS-T) for a long-term dividends and growth? Using his ranking system, he would favour this bank. However, looking at the longer-term on both, National Bank has probably outperformed. It depends on where you think the economy is going. If you think emerging markets in Latin America are going to improve, this bank will probably have a little bit more growth.

The seasonal period has ended for the banks, so it is prudent to exit some of these. If you are a long-term holder, Canadian banks are not a bad place to be, and offer quite a juicy yield. Also, volatility tends to be much less than the general market. The next period of seasonal strength will be from August through to December, into their earnings season.

Long-term you should be fine holding this. Banks are going to continue to generate a lot of profits going forward. However, expect more volatility out of this.

There were naysayers who seem to be worried about their international exposure. Their international exposure is only Central America, Mexico and some parts of South America, but not in Brazil. When they reported, their big growth was on the International side, up 21%. Still trading at a very low multiple at 10X. Yield of 4.89%.

The banking sector tends to do well at this time of year, but banks have a lot of headwinds against them. The good news is that the banks have come through this earnings season relatively unscathed. The banks are stable as far as an investment goes, for the next little while. If this breaks above $58, that will be very positive.

Bank of Nova Scotia (BNS-T) or CIBC (CM-T) for a long-term hold? Prefers Toronto Dominion (TD-T) because 50% or more of its branches are in the US, and he likes the upside of the US growing more rapidly than Canada. As a minimum for banks, he would own one Canadian and one American. Wait for their earnings and see how they do.

Likes all the Canadian banks. They are cheap relative to their past multiples. A substantial part of the bad news is already baked into the stock price. This one focuses on emerging markets, and as those markets over the years become more prosperous, you will see that reflected in their business.

In 2 years you are going to be happy having held onto this. There is going to be pressure on this as well as the other banks. We are going through a rebasing in the market, a re-pricing of equities, and the financials are getting hit.

Which 2 Canadian banks would you buy now? Has been adding Bank of Nova Scotia (BNS-T) and CIBC (CM-T). Thinks Canadian banks are reflecting a somewhat worst-case scenario. Valuations are probably getting down to 2008-2009 levels, and he does not think the outlook is nearly as dire. Earnings start coming out next week, so we’ll see.

A good Buy at these levels. This has been hurt with the resource selloff, as they have a fair amount of Latin America exposure. All the banks are discounting or have already discounted the oil price decline in Canada. There has been US Shorting on our bank names because of assumed real estate exposure. However, he thinks valuation is attractive on pretty much all the banks. Yield of about 5%.

TD-T vs. BNS-T. They are different in terms of the business. Both get half of their revenue from outside of Canada. BNS-T has been beaten up more because the Latin American economy is less stable than the US. It is a good entry point if you don’t have exposure to Canadian banks. It will be a 9% return including dividend for 5 years amongst volatility.

One of the things you have to look for in Canadian banks are their earnings in their balance sheets, which are coming out in a couple of weeks, as it may give you an opportunity to buy them cheaper because of volatility. From a valuation perspective, they are all trading below 10X earnings, except for TD (TD-T). Dividend yield of 5.4%.

A well-run bank and he likes what the new CEO is doing. He is being tough on the organization to make sure it is being run on a cost competitive basis, but he is operating in very difficult environments and they are going to stay difficult for the foreseeable future. Thinks the banks are good value, but could become even better value. They’re all trading at around 10%. This is yielding about 5.3% and he could see it yielding 6%.