National Bank of Canada (NA.TO)

This bank is more concentrated within Québec, and capital markets tend to be a bigger proportion of their overall revenue base, which makes it a little more volatile and sensitive to capital markets activity. She likes the banks as a group with this pullback, but if she had to buy one it would not be this one. (See Top Picks.)

(A Top Pick Feb 5/14. Up 13.06%.) His favourite bank. The valuation is very cheap. Thinks the earnings will grow in 2015.

Tremendously oversold, along with all the other Canadian banks. At today’s closing price, it is paying about a 4.2% yield and trading at around 9.5X of what he expects they will earn in 2015. Sold off because it has been computed that it has the largest exposure to the Canadian oil industry in its wholesale banking of any of the Canadian banks. He doesn’t see many Canadian oil companies going bankrupt in the next little while. Oil companies are cutting their dividends and cutting their CapX, but that doesn’t mean they are not paying their bank loans. This bank probably has less exposure on loans to oilfield workers and mortgages in Alberta, then the other Canadian banks.

A great bank if you look at Québec. They basically own Québec with one other bank. As a result of that, they have great fees. However, they have been adding to their capital markets business and have aggressively come out to Calgary, which is where a risk stems from. This rarely trades at parity to other banks. You sell this when it trades at 12X and Buy when it is discounted by about 15% to the other banks. Thinks the banks have some headwinds and have to re-price some risks back into their multiples before they are attractive again.

The group overall has taken a hit, but of all the banks, this has the biggest exposure to the energy sector in its loan book. 3% which is not huge, but it is there. Also this tends to trade at a slightly lower multiple because capital market is a bigger percentage of their earnings than the other banks. Also tends to be more volatile. She prefers the other banks that might have US exposure.

All the banks have been peeling off and this is no different. Numbers are good and they just increased the dividend. We are going through a process in the Canadian market, where Canadian stocks are being sold off, primarily by foreigners. When you get this kind of opportunity, you should add a bit. Yield of 4%.

Came out with some relatively indifferent numbers recently. One of the smaller banks, but also one of the banks that has a lot of oil/gas loans in Alberta. Have done a great job in the past, when other banks ran for the hills. With some of the Junior oils facing some tight times, he would be a little bit concerned about their oil/gas portfolio.

Banks can continue to do well through the month of December all the way through to April-May. A number of the banking stocks have shown some resistance at the September high, but this one has actually exceeded that. It broke out, which potentially implies higher highs and higher lows, assuming it can hold at present levels. If they can hold the present price, the trend is positive.

Likes this bank. They have been growing. As the Québec-based bank, there is always a kind of discount because of the fear of separatism being high. It shouldn't be high at this point. This would be in the top 3 of his picks.

Hosted their annual meeting in Calgary which is significant. Trying to get away from their Québec roots and grow out into the rest of Canada. They have chosen a couple of specialty areas to do that in, including handling back-office transactions for investment firms and the like, and are also the largest custodian for certain types of investment firms in Canada. Thinks they are pretty well positioned. However, they don't have the scope and scale of the rest of the banking sector, which would be somewhat of a risk because they are Québec-based and are dependent on the Québec economy. A well-run institution. Meets all of his criteria if the stock gets cheap enough.

Best managed bank in Canada. Since 2003 their performance has outpaced every other bank. They have raised the dividend the fastest. Yet it trades at the lowest valuation of any of the Canadian banks. He sees the company earning $4.75 to $4.80 next year, so you are paying 10X earnings. Yield of 3.78%.

It is a little more regional than the others that are more diversified across Canada. They have operations in regions that are not as strong. There is a high capital content to their business and that is the higher risk part of the business. Prefers 4 of the others. There is nothing wrong with this one, however.

From here this has probably got another 15% upside and, at that time, he would probably switch it. The banks are one of those groups that you can really switch around within the banking group.

(Market Call Minute.) This bank has had the highest dividend growth of any of the big 6.

Canadian Banks look fine. Thinks there is some growth there, but not robust growth going forward, especially given where we are in the cycle in terms of real estate. He would choose the insurers over the banks.