National Bank of Canada (NA.TO)

A cheap stock trading at under 10X earnings going forward. The risk now is probably their Western exposure. They really levered up to the oil/gas industry in the past couple of years, especially the junior players. He is light on bank stocks right now. They are going to be a little more earnings challenged over the next couple of quarters. Growth is obviously slowing down in Canada.

They raised capital recently. Banks tend to go up and down together. He loves the equal weight bank ETFs. Why go with one bank. He prefers ZEB-T.

The whole sector has been a little dodgy. It has found support around $40. We have that floor at least. You are not in danger of it moving lower without something new. He prefers BMO-T for a play into November. If NA-T were to break $40 it would probably go lower, otherwise collect the dividend.

He still likes it. He is not happy with the share price performance. They are happy with 9% capital, but other banks are at 10% capital. In this business you want to buy the worst performing bank. This one is now being punched in the face, but it will come to the front of the pack at some point.

He has had it for a long, long period of time. He is not ready to sell it yet. They did an equity issue to shore up capital. They do have perhaps a hit coming. 85% of their loans are Quebec or Ontario. Their credit has held up very well so far. He thinks we will see some deterioration in all banks’ credit in the next little while as he expects a bump up in credit losses. Their wealth operations have been very steady and he would not worry about it.

There was a charge and some job cuts. They cut their dividend in the `90s. They raised some equity in the last couple of weeks. They have a higher exposure to the energy patch than the others.

The issues they had don’t move the needle much. With that hiccup they had to do some cost cutting. The Canadian banking sector is very conservative. It is 10 times earnings with a 45% payout ratio. 5% yield and the volatility of the EPS numbers is very small. He thinks Quebec and Ontario will outperform the rest of the country. He has TD-T and RY-T.

5% dividend. These banks survived the financial crisis. The dividend is secure. Other banks are more attractive because they have a wider scope.

Wait and watch. It looks really cheap, but others also do so. The 5 year outlook is good if you want to hold it for 5 years. If it continues to grind its capital, it will be a good candidate to be acquired. It is running a lean operation right now. You will see a margin increase next year. At these levels it would be a good long term hold.

They are taking a write down and issuing more shares. It has a great presence. It is not expensive. It has a great yield which he thinks they can maintain. All the banks look relatively cheap right now. He prefers TD-T and RY-T.

Earnings last quarter were up about 4%, which is pretty good in this environment. He likes their footprint. They have a good core business in the P & C business in Canada. Their capital markets business has been doing very well and is a very profitable entity. That constitutes about 40% of their earnings. Also, have a pretty good wealth management franchise. Trading at a very attractive multiple. Dividend yield of 4.85%.

It is safe, certainly. He has BNS-T, RY-T and TD-T plus a little CWB-T.

You associate this bank very much with Québec. It has had a great history in the past few years.

A high-quality franchise. A little bit different than some of the other banks with a bit more dependence on capital markets. More of a domestic oriented bank with dependence on Québec. Some exposure to Ontario, but they also have a fair bit of exposure in the energy patch. Thinks the dividend is safe. He prefers US banks.

This has a larger exposure to the energy sector than what you would think, although they are a Québec based bank. 4.9% dividend yield. He would prefer others.