Peter Gibson Toronto Dominion TD-T DON'T BUY Feb 04, 2009

Turned the page on money-laundering fine, but the fix won't be overnight. Likes the excess capital on the books. Applauds its plans for share buybacks, focus on capital markets, and strengthening its Canadian franchise. #1 discount brokerage platform in Canada.

Held up fairly well all things considered, as money's rotated out of large-cap financials. Support is around $74 with the December retest. Bumping up against resistance close to $86. That's the range, and we're waiting to see if it goes through. Financials have started to struggle, so this could go either way.

Issues in US last year, and growth is probably capped there. Strong Canadian branch presence with consistent earnings and growth. Still have to see new management performance. Increased costs due to compliance and risk assessment procedures. Stock's done well, still some room to go.

Canadian banks are cheap. If you don't buy now, then when? Yield is over 5%.

The big banks face challenges, because the homes bought during Covid, when interest rates were rock-bottom, are and will pay much higher rates. TD is very tied to home mortgages, so be careful. Also, they're restricted from growing their business in the US for 4-5 years. He sold it, because the future didn't look great. He bought more Royal instead.

Avoided it since money-laundering issues in 2022. Lots of shareholders are stranded at higher prices, who would be sellers if they got their money back. He owns RY.

Likes TD a lot. Very undervalued at 10x PE. Potential for multiple to rerate in medium term. More upside as it distances itself from the overhang of regulatory infractions. All that should give you a better total return. He'd pick TD.

For BAC, even with deregulation in US, the big banks are already so large, it's hard to imagine they'd be allowed to get even bigger.

Asset cap in US will be in place for a number of years; once it's eventually lifted, that will be an avenue for growth. US accounts for about 25-30% of earnings. Bank feels it can still grow in Canada. Valuation still quite attractive at 10x PE. Path back to growth will take a while. Yield is quite attractive too.

Q1 was a much-needed low-drama quarter. Schwab sale. Market appreciated the quicker CEO transition. Wealth management good, strong capital markets. Still trading at a premium to the group, and that's not warranted because of growth limits in US.

All banks are at risk if economy darkens. But if economic environment is OK, he thinks BMO has the best upside.

The steep fines they paid for money laundering are all in the rear-view mirror. TD is more exposed in the US vs. its peers. Is trading at a high valuation in this space. The worst is behind them. Pays nearly a 5% dividend. Other banks are his favourite, but you can own this.