Opinions
Paul Gardner, CFA
National Bank of Canada
NA-T
BUY
Nov 09, 2023
Stock price when the opinion was issued
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Despite its expected growth, National remains cheap. It trades at 12.16x PE, compared to TD's 17.6x and Royal's 15.82x. True, NA's 3.13% dividend yield falls short of, say, BMO's 4.62%, but the projected growth makes up for this. Another plus is that National has no exposure to office real estate in the U.S., and only 8% exposure in commercial real estate there. Most of the bank's assets and operations lie in Canada. NA-T is a buy and hold.
Overall, banks should be correcting a little more than they are now. He sees some growth risks in Canada specifically. A bank like this, that's mostly exposed to the Canadian consumer and market, will have a bit of a correction if our economy is weaker.
Likes the name, but he'd wait for more of a drop before putting in new $$, perhaps another $10 lower.
If only he could roll back the time machine on his portfolio.... The bank that grew up and took a well-deserved seat at the big boys' table. Exceptional bank, packs a big punch in capital markets. Standout results. Purchase of CWB is a hand-in-glove fit, strategically sound, likely accretive. Lots of blue sky ahead, no qualms adding.
Likes it in general. Great platform and franchise. If economy is heading for a contraction (for whatever reason), this name doesn't have the geographic exposure of the other 5 banks. Mainly in Quebec; very small US and international footprint. Extremely good job of growing, so he wouldn't bet against management. It's a macro call.
Disclosure: his dealer custody is with NA.
For the last year and a half, he's been incredibly defensive on the bank side. But you have to own something, because it's too big a sector not to.
He'd recommend NA. The most defensive of all the banks because they don't have to deal with mortgage issues. They do more custodial services and have an investment arm. Reasonable 1.2x price to book, PE around 9x. Outperformed all the other banks. Conservative.