Royal Bank (RY.TO)

This is probably one of the better bank performers and probably just a little overvalued. Just struck a deal today to buy Ally Financial’s Canadian auto finance and deposit business. They are just generating so much excess cash flow. They have no need for it. Not his favourite bank.

(Top Pick Oct 31/11, Up 24.39%) Thinks their current acquisition will be a good fit. It moves them into the car financing business, which some of them are doing. The premium with which they used to trade compared to other banks has gone away. Still likes it.

Has a fairly high degree of confidence that their business is not going to grow that much. Dividend should be fine. Consumers are retrenching. Home prices are softening. If you are looking for just the dividends it should be fine but if you want something more, look elsewhere.

This bank ranks very high on both a weekly and monthly basis. Stock is on an uptrend and will have some resistance right now. If it can punch through about $60, it will probably get close to $70. If it broke below $54, he would get out. He would be more inclined to look at the basket iShares S&P/TSX Capped Financials (XFN-T) although you will give up a bit in yield..

One of the best fundamentally-ranked stocks. Should see low $60s in the next 6 months. Doesn't think it will have any big earnings surprises. You should exit if it gets to $55.

Banks. It is important to focus on the right groups. Wants strong cash flow, good balance sheets and strong dividend policy. RY fits all of this. Canadian banks are under performing US banks, which he prefers. Thinks you would do better in City Bank, but RY is a leader in Canada.

Likes the Canadian banks. (See Top Picks.)

(Market Call Minute) Great, solid long-term name. Not his favourite bank.

He is comfortable with this right now and it is one of his larger positions. Biggest company in the Index so you have to have a good reason not to own it. Earnings are recovering. Obviously good exposure to wealth management in Canada. Valuation is a little on the high end. Canadian banks have a premium valuation but thinks there is a lot more upside compared to some of the US banks right now. Dividends are north of 4%.

Banks still have room to grow their dividends and from a valuation perspective they are quite cheap relative to other sectors such as pipelines. This one is the most exposed to growth in the US and global investment banking is coming back. With Europe putting things more or less in place puts them on somewhat of a better platform. His favourite names would be this bank along with Toronto Dominion (TD-T).

(A Top Pick Sept 20/11. Up 24.93%.) Was trading at a discount to the other banks at that time. There are other banks he would prefer buying at this time.

(A Top Pick Sept 16/11. Up 4.28%.) Still likes.

As long as you see this trading above the 200 day moving average, around $54, it should be okay. He is not a big holder of Canadian banks.

Likes this bank but doesn’t believe you are going to get the global growth and explosive type of returns that you had many years ago. You are really looking for a dividend play here and a decent growth rate.

Had a great last quarter. There was a surprise dividend increase. Not overly expensive but would prefer National (NA-T), which he thinks is cheaper. Has recently trimmed his position in this bank and bought J.P. Morgan (JPM-N). With Cdn$ at these levels, you can take advantage of buying US banks. Also, feels US housing is in full-blown recovery where Cdn housing has already recovered and probably peaked.