Opinions Stockchase Insights
Royal BankRY.TOBUYJul 26, 2023
Stockchase InsightsStock price when the opinion was issued
As of Jun 26, 2026. Market Open.
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You can buy those calls back, and then roll up to $320 or so. If you buy back the near-term call, and then sell a longer-term call, chances are it won't cost you any money.
Absolutely don't sell a put to oblige yourself to buy more, not right now. You want to sell puts when the premium is really good. Premium here isn't good, as stock's been heading straight up.
Great quarter. Belle of the ball of the banks. Strength in Canadian lending in both personal and commercial. Less cyclical than before, as rough markets lead to more trading and helps diversify earnings profile.
He's a bit wary on the sector, and questions the high valuation as well. Always traded at a premium -- stability, growth, strength in wealth management. But the premium has eroded, as they're all expensive now; that argues for holding onto this one. CEO stated that demand for credit and loans is staggering, which would support another leg up.
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Premium contentAs the Canadian economy appears more resilient than analysts estimate, we reiterate RY again as a TOP PICK. Most recent quarterly earnings showed growing cash reserves, while debt was retired and shares bought back. The Capital Markets division saw a 23% increase in earnings over the year. The dividend has grown over 10% annually over the past five years. We recommend trailing up the stop (from $242) to $251, looking to achieve $333 -- upside potential of 18%. Yield 2.2%
(Analysts’ price target is $271.11)
It doesn't matter which Canadian bank you bought 20-30 years ago; all offered double-digit returns with growing dividends. No question that their valuations are the highest in a long time, because they sailed through all worries (higher mortgages, a Toronto housing collapse didn't happen, tariffs, Iran war). Meanwhile, the banks have transformed more to fees and recurring revenue.
Premium contentToday he's taking money off the table in the sector. Why? Valuation. Trading today at 2.6-2.7x forward book value, yet the business hasn't really changed all that much. In on the SpaceX IPO, which is like money from heaven.
Martin Cobb, ASIPShe's been wrong about the Canadian banks the past year, that they're expensive. They were up 30% last year + 20% this year. These stocks are priced for perfection and trading well above historical averages in PE. Wait. Last year, they released provisions for loan losses into earnings, which was a temporary boost. Their only growth aspect this year is how many branches a bank can close, which is a weak growth driver. She hasn't bought any banks this year.
He's a big fan of EQB. Phenomenal CEO, who'll take company to new heights. Will most likely outperform in next 3-5 years. Organic growth will be higher. A more agile and flexible organization. Digitally native, so it's built to adapt. Very conservative provisioning.
You buy RY for stability, its huge infrastructure, and capital markets business. Sufficient provisions for consumer credit issues. Very solid hold for the longer term.
Both are a Buy in his books.
Premium contentWe reiterate as a TOP PICK RY, one of five Canadian banks who have partnered to create the Defense, Security, and Resilience Bank (DSRB) designed to provide funding to the Government of Canada's commitment to boost military spending. Recent reported quarterly earnings showed a 12% increase in net income along with growing cash reserves as the bank bought back shares and retired debt. It trades at 17x earnings, 2.6x book and supports a 16% ROE. We recommend maintaining the stop at $220, looking to achieve $284 -- upside potential of 18%. Yield 2.6%
(Analysts’ price target is $245.07)
His favourite, the 800-pound gorilla. The biggest, the baddest, and it dominates.
Brendan Caldwell
With Iran conflict, yield curve has gone a bit flat, so net interest margins aren't going to be as good. If the conflict persists, earnings will possibly decelerate. This name is best positioned for all that. Usually trades at 11% premium to peers, now 8%.
If you assume that the conflict gears down to more manageable levels, you could buy the banks here and this name is the best choice.
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research
RY has been one of the fastest-growing Canadian banks, and it has survived several recessions in the past. Although there is the potential for a recession to arise as a result of high interest rates, we would be very comfortable with holding any of the large Canadian banks for the long-term. While there are concerns about a potential recession, a lot of these fears have been priced into the Canadian banks, as we have seen their valuations contract as a result of weakening capital markets and reduced lending.
The large Canadian banks will generally grow with the economy and the capital markets. As the Canadian real estate market grows and consumers and businesses take on additional debt to fund real estate, property, investments, etc., the large banks will benefit and see their top and bottom lines grow. Most of the Canadian banks have also been expanding into other geographies, which has helped to stimulate growth.
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