Opinions The Monthly Gems by Allan Tong
Canadian Imperial Bank of CommerceCM.TOTOP PICKMay 05, 2025
Stock price when the opinion was issued
As of Jul 31, 2026. Market Open.
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He'd hold. Despite the incredible chart, the banks are very well positioned. Benefitting from GenAI and AI investments. Regulatory environment is in their favour with OSFI lowering threshold for risk-weighted assets, which means they have more capital to lend. Consumer is reasonably healthy. As long as interest rates don't go flying through the roof anytime soon, the banks can continue to do well.
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Premium contentWe again reiterate this stalwart Canadian institution as a TOP PICK. Recently reported earnings showed a 28% increase in net income (led by a 55% increase in US based business) along with a profit margin of 27%. We like that cash reserves are growing, while debt is retired and shares bought back. It trades at 16x earnings, 2.5x book and supports a 16% ROE. We recommend trailing up the stop (from $140) to $152, looking for $190 -- upside potential of 16%. Yield 2.5%
(Analysts’ price target is $168.00)
Premium contentWe reiterate CM as a TOP PICK. If you are banking on the Canadian economy finding its direction thru infrastructure and energy development, the company is well positioned to benefit. It trades at 15x earnings, 2.4x book and supports a ROE of 16%. We like that cash reserves are growing, while shares are aggressively bought back and debt is retired. We continue to recommend a stop at $140, looking to achieve $179 -- upside potential of 16%. Yield 2.8%
(Analysts’ price target is $156.50)
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We're speculating what will happen. Last year, most of the Canadian area was protected from tariffs because of CUSMA. The US would be paying more for our goods through tariffs; they buy many of our goods. Banks are at the tail end of their elevated provisions and their stocks have done quite well as interest rates have declined. The Bank of Canada has signalled it may hold rates for a while, but the government has released more fiscal support and opening more trade channels, which are good. She remains bullish banks.
Premium contentCM is one of five Canadian banks who have partnered to create the Defense, Security, and Resilience Bank (DSRB) designed to provide funding to the Government of Canada's commitment to boost military spending. We think the DSRB will create another avenue for business growth in the years to come. It trades at 16x earnings, 2.1x book and supports a 14% ROE. We like that cash reserves are growing, while debt is retired and shares bought back. Its dividend is backed by a payout ratio at 45% of cash flow. We recommend setting a stop-loss at $117, looking to achieve $154 -- upside potential of 15%. Yield 3.0%
(Analysts’ price target is $130.77)
The new infrastructure projects that Ottawa has announced will benefit the banks. NA is more Canadian than CIBC, though both are. Big projects need a lot of funding, and the banks' job is to find that capital. CM is pretty well priced now.
Michael Sprung
We've already recommended National Bank, so let's look at the second-cheapest bank, CIBC, with its 11.2.x PE and EPS growth over five years of 5.39%, better than RY's 5.16%. Commerce has beaten its last four quarters with room to spare, and pays a safe dividend of 4.49%. Its EPS growth is beating the sector, and its most recent EPS was 17.89% higher than a year ago. CIBC's margins outpace the sector. Unlike TD, CIBC has a small presence south of the border. Because of that, a lot of its business lies in Canada—residential mortgages and commercial business—which will slow down if the economy does. That would explain why the street has assigned CIBC a lower future PE of 11.09x. That said, CIBC offers a safe, generous dividend with reasonable room to grow, certainly better than TD.