Royal Bank (RY.TO)

(A Top Pick June 17/16. Up 26%.) The catalyst on this was a big Short interest as speculators felt that Canada would really fall apart. He still sees this growing at 4.5% over the next couple of years. It is outperforming its peers on an operating leverage, even without restructuring. Had a very solid print on Q2. This is at a level where you could start adding to it now.

(Top Pick Jun 14/16, Up 26%) One of the top three banks, which she owns. There were hedge funds shorting them based on housing, but it has gone through that. They have a diversified business. It had increased its dividend earlier this year to around 3.8%. Earnings will grow 7-8% this year and dividends should increase.

CIBC (CM-T) or Royal Bank (RY-T)? CIBC is the perennial laggard of the big banks, because historically it has been accident prone. Also, they don’t have the International areas like the others. Royal always has a higher premium. You have to ask if you want more domestic exposure or something with a little more US flavour.

Toronto Dominion (TD-T) or Royal Bank (RY-T) for a long-term buy? He is basically an investor in Toronto Dominion. It got off the mark before anyone else, in terms of getting a position in the US, and thinks that is going to be very important. The Royal was late to the game getting into the US.

He expects the earnings, coming out next week, are going to be pretty good. The notion that they are taking losses on mortgages is ridiculous. He sees no evidence at all that Canadian banks have lost money on real estate. This bank has been making money in private wealth management, and have probably done okay in trading. He would always wait until after earnings before making an initial purchase.

She wanted to choose a bank, to show that she likes the banking sector. This has pulled back from the beginning of the year. All the banks had a great year last year, so she doesn’t expect returns of 25%-26%. They have about 25% exposure to the US, and she thinks the US economy is going to grow faster than the Canadian. Acquired City National which focused on high net individuals and commercial loans. Dividend yield of 3.7%. (Analysts’ price target is $101.)

Owning Canadian bank stocks has never really hurt. In years when stock performance is weak, you tend to get a little bit of a dividend, so you get paid while you wait.

(A Top Pick Dec 9/16. Up 31.11%.) Long term January call. This was just a way to leverage a position, and this is still good till next January.

Sell or hold? The entire Canadian banking sector has moved up. Some of them are a little cheaper than others, but you are not going to get any compelling buy comparable to this bank. If you are a longer-term investor, this is fine.

Toronto Dominion (TD-T) or Royal (RY-T)? The benchmark in Canada. The most diversified and dominant in almost every area they participate in. From a price point of view, he thinks this one is a little more preferable. There is not much to differentiate between the 2 yields. This would be his preferred holding. (See Top Picks.)

A North American bank? He would suggest Bank of America (BAC-N) for a US name, and if you want a Canadian name, then he would suggest the Royal Bank (RY-T).

(A Top Pick March 10/16. Up 37%.) The banks as a group have done very well. At that time, there was a question about the Canadian economy going into a recession and concerns about housing. The valuation had contracted substantially below their historical averages, as well as having concerns about the energy patch. Her target one year out is about 7%-8% from here, not a bad share price appreciation with a yield of 3.5%. Still a buy. (See Top Picks.)

The growth prospects for this bank are positive, however the prospects for the stock for the next 6 months is probably due for a “breather”. Valuation is at 13.5X this year’s expected earnings. Between 2003 and 2007 all the banks typically traded at between 12X earnings and 13.5X. Between 2003 and 2007 we had a much more vibrant housing situation in Canada. He would typically Buy when a Bank was trading at 12X, and Sell back at 13.5X.

Royal Bank (RY-T) or Manulife (MFC-T)? This one definitely looks a little better. Chart shows it had a major break out in 2016, and he thinks it is going higher.

Had a great quarter. All the banks are likely to come out with fairly reasonable earnings over the next couple of days. They are going to benefit from a rising interest rate environment. Security prices are a lot higher, so capital markets are doing a lot better. Dividend increases continue and he sees that continuing. (See Top Picks.)