Canadian Imperial Bank of Commerce (CM.TO)

(A Top Pick Jan 29/13. Up 10.65%.) Capable of some modest multiple expansion from here. Can see healthy single digit earnings growth over the next 3 years. With the yield, it gives you double-digit returns.

Historically higher yield, but her preference was to play RY-T. Capital markets are more volatile.

Banks at this time have strong seasonality. This year, the banks actually started taking off on positive earnings in August. Seasonality starts in early October, goes to the end of the year, has a brief break and then goes from January into April. Technically, the charts show it has broken above its recent high, which is very positive.

Metrics for this bank are the best of all the Canadian banks. He has been watching this. Won an award for one of the best managed bank operations in North America. Made some fairly significant mistakes back in the early part of the down cycle and got caught. One of their big mistakes was insuring mortgages with a mortgage insurer that then went down the tubes. People have long memories, which is dogging them at the moment. Right now they are as well managed as any of the others, and they do look cheaper on the metric basis.

We are just entering into the period of seasonal strength for bank stocks in general. End of Sept through to the end of December. This is the time when banks are reporting their fourth-quarter results and CEOs love to give you good news. There is a chance that it could reach and hit a new all-time high.

Shows a pretty well on some of the metrics and the dividend yield of about 4.3% looks pretty attractive. From a yield perspective, he feels, you could own this. Bank stocks have all had big moves here and are back up to their old historic highs. This one has the largest exposure to the Canadian residential mortgage market so is probably the one that people are most concerned about. The average consumer is so heavily in debt, that you have to ask yourself how much more money can the banks lend to the consumers. He would prefer Bank of Nova Scotia (BNS-T), which is like the other banks.

Most banks have already taken out their highs but this one has not. CM-T has persistently been an underperformer. Prefers others. Thinks banks will correct 5-10% in the next few months and so would not put new money into banks now.

When you look at valuations and metrics, this bank stands out. What investors don’t like is that it is not as diversified as some of the others. This one is largely a play on Canada and Canada retail. If you are concerned about the Canadian economy and housing, then you want the bank that has the ability to earn profits in other geographies as well. There is nothing wrong with this bank. For patient yield investors, this is a fantastic story.

The travel card mess-up has cost them 45-50 cents per share. CIBC is the most domestic of the 5 and he likes it. Total yield is about 10%. He owns others but says this would be a good addition.

Price-to-earnings is excellent compared to the other banks. Price to book is better. Earnings per share is much better. Dividend yield is greater than the others. ROE is 21.4%, the highest in Canadian banks. Expect this will go higher.

Has never been her favourite bank. It lags because it doesn’t really have growth or a focus. It is cheaper than the others and always has been. She would prefer Bank of Nova Scotia (BNS-T) or Toronto Dominion (TD-T).

After the last 5 years, you would think that this bank would be getting a lot more respect than what it has been getting. Recent quarter was particularly strong. Thinks the bank has been de-risked. This gives you a bank at a discount with the highest running return on equity, and certainly one of the highest capital bases in the industry. Yield of 4.68%.

All banks reported good results last quarter which is because they did a good job diversifying. They have the Aerogold Visa card. It is about 10% of their net income. They are trying to negotiate with TD to sell it back to them. A lot of people are worried it could be too expensive. They have a discounted multiple because people think they will still trip over something. Would not be his first choice. TD would be. When it happens, he believes you will see more steepening in the yield curve. Banks should react to this. But he is more concerned with whether the Canadian real estate market will flat line or dip.

Rather than pay a dividend they are going to buy back up to 8 million of its common shares. They are probably doing this because they feel the stock is cheap. Not trading at extreme prices.

Had a hiccup as they lost their aeroplan sponsorship. Likes this. Of the 5 major Canadian banks, it is the most purely domestic. Great long-term bet. (See Top Picks.)