Laurentian Bank (LB.TO)

Banks is a sector that are performing well, and you don't need to buy one that has a perceived problem. If the market is doing well, you want to participate. If this is underperforming the bank sector, he would not be a buyer.

Within the banking group, this has always been in the higher risk/reward, more regional, more restrained area. You are always more exposed to the Canadian consumer and Canadian commercial elements. It’s always been reasonably well managed. Their dividend is extremely well covered. If buying for yield and willing to be patient, this could turn out to be a good investment at these levels.

Announced some problems with mortgages resulting in a knee-jerk selloff. This bank is similar to Canadian Western Bank (CWB-T). They are not large compared to the big Canadian banks, so they are not as diverse and don’t have as many revenue lines. They generally have more volatility. The valuation is not that much different from some of the bigger banks, so unless it was sufficiently cheaper, it would not be his first pick.

Good management team that is focused on high return on equity activities and shutting down those that don’t have a good payoff. They are rationalizing their branch locations. It is a "Steady Eddie" company with a conservative payout ratio. 50% of their business is in Ontario and now they are expanding south of the border. (Analysts’ target: $58.00).

This bank has done a tremendous job in trying to improve underlying operations with a focus on ROE. A big under performer relative to the other banks in respect to their profitability and ROE generation. Now they have focused on that, so are closing a lot of branches and optimizing operations. They are focusing on issues which are profitable, where they don’t have to compete with other banks and other institutions. It has really reinvented itself. However, it was a great buy closer to BV, and has even dipped below BV. Every time they do this, it is a tremendous buying opportunity. Dividend yield of 4.08%.

A big franchise in Quebec. They are cutting their branches by a third. He has TD-T and RY-T, but LB-T was undervalued along with CWB-T. He prefers TD and RY because of better access to the US. (Analysts’ target: $61).

Laurentian Bank (LB-T) or National Bank (NA-T)? Both are Québec based banks, and tend to trade at a discount historically to the sector. National is larger and tend to have more of a higher risk asset mix in terms of lending and international ventures, but also has higher growth. Even though it is working very hard outside of Québec, it is primarily a Québec retail bank. The rationale for buying this bank is more on the dividend, and the hope for more improved efficiency.

Only step in if you see a significant difference in valuation with the other Canadian players. He does not see that now.

(Market Call Minute.) He prefers something like Toronto Dominion (TD-T) that has more exposure to the US.

(Top Pick Aug 20/15, Up 9.47%) A really, really cheap stock. It was its usual low.

Canadian banks have improved, but are not ripping the leather off the ball on growth across the board. This bank rates “okay” on his dividend model, being 140 out of 743 stocks in the database, but there are kind of warnings because the latest year-over-year growth in cash flow has been negative at -3%. Three-year cash flow has only been at 5%. There are better opportunities elsewhere to give you a better adjusted return.

He wants to focus on US based banks and insurance companies.

(A Top Pick Oct 21/14. Short. A pairs trade with Callidus Capital (CBL-T). Down 1.84%.) He has a long-term Short on this bank.

This is small and it is regional, but going into its earnings report tomorrow, people are probably expecting some good news.

Very, Very cheap, huge discount to book value. If you look at historical lows since 2009 other than the knife slices down, this one is there. It is a lovely trading range that it has been stuck in for a long time. If you get 25% of capital appreciation plus the dividend you would have a very nice year.