Toronto-Dominion Bank (TD.TO)

(A Top Pick May 25/23, Up 1%)

 When trading Toronto Dominion, he would draw the line between $78 and $83. It could move to around $90. Put a stop loss in at close to that range.

BNS has been a perennial underperformer, he sold. Not tempted to buy the Canadian banks right now.

TD gave pretty decent targets of high single-digit growth over the medium term. Market doesn't believe them, stock remains under pressure. Worries about Canadian housing, economy, higher interest rates. A lot of the damage is already in the share price.

He owns NA. He looks for the best companies that have the best management and add value over 3-5 years, and doesn't worry about day to day stock prices.

It is an attractive dividend paying stock with a 4.7% yield. It has dropped to third in the list of Canadian banks but is the most capitalized bank with lots of excess capital, $16 billion. It has a 1.6% share buyback program in place and is undervalued.    Buy 14   Hold 4   Sell 1

Trading at 1.4x book, close to 10x next year's earnings. Great franchise, lots of capital. Will probably go after another US acquisition. Very diversified, which protects them in a difficult environment. Good time to buy, you'll do well. Yield is 4.78%.

Very well run. Typically doesn't trade at a discount to peers, but it is today. Massive excess capital from failed acquisition gives it lots of levers to pull in a difficult environment. Over the medium term, good upside on multiple and earnings. Yield is 4.81%.

A top pick last month. Shares are attractive. Likes the banks. The overhang of the First Horizon cancelled deal resulted in TD holding a lot of capital. TD will expand more in the US, and maybe buy another company. TD will focus on Canada as immigration will increase more in the near future. TD used to trade at a premium, but not at a discount below 10x as it pays a 4.8% dividend (usually it's below 4%).

At a nice discount to adjusted book value. Needs to hold right in here where it is. Looks to be getting pretty cheap. Could drop a bit further, but getting to a level where he wouldn't worry. Yield is 5%.

Pays a rock solid dividend and PE's are very low now and don't make sense. Glad that they didn't buy First Horizon. Canadian banks were unfairly sold off due to the US regional bank crisis. Earnings weren't great for the banks, though. TD's loan loss provisions weren't as great as expected, capitalization is great, and their dividend is safe. Take advantage of depressed valuations now.

Likes it. Too bad it had to give up on First Horizon. Good footprint in the US. Will have to grow organically, which will take longer than by acquisition. Banks with US exposure will have a tougher slog. But over the longer term, that's how they'll grow because it's such a larger market than Canada. 

He's getting a little more positive on Canadian banks. He added some TD recently after they cancelled the First Horizon purchase which is a long-term positive, despite worries of TD not growing in the US because of regulatory concerns. Their recent numbers weren't that bad. Their capital ratios are outstandingly good. They won't raise dividends, but they could buyback shares and do an accretive buy in the US. Housing will be a slight headwind, capital markets will slow down and loan loss provisions will rise--but we all know that. It trades at 8x PE and has wads of excess capital. You can do worse than wading a bit into the banks.

Be cautious: stock might be breaking down, and he may have to sell. (Top Picks were submitted last week.) He'll give it a week or two. Potential to bounce, but keep an eye on it. (At this point, he likes the SU trade better as a Top Pick.) He only has 2% exposure. You always leg in, as it saves you from bad trades, which are part of the business. Yield is 4.88%.

One of the best-managed banks in Canada. Great acquisitions in the States. Issue is they're being hit on deposits with higher interest rates. Long runway.

Now has some $20B in excess capital. Good position to be in if they decide on another acquisition, it's a buyer's market. Could increase dividends, buy back shares. Nothing fundamentally broken. Should grow earnings and dividends at high single-digit pace. Good 5% dividend yield. Timely entry point.

Likes the sector. Stock's attractively priced given overhangs of failed acquisition and SCHW issues. Attractive multiple, both historically and relative to peers. Lots of excess cash. Yield is 4.70%.