Toronto-Dominion Bank (TD.TO)

Like a lot of Canadian banks, it has US operations, which would probably be the one area he would be most excited about, in part because the US banks find themselves in a better environment than they do in Canada. Thinks there will be legislation changes in the US, which favours bank shares in general. The flipside is the constant buzz on the Canadian real estate market. This bank operates in the prime mortgage market. Doesn’t think you’re going to make a lot of money in any of the Canadian banks right now. He would much rather focus on banks internationally rather than domestically.

Historically this has a bit of a pullback just after they report their fiscal 2^nd quarter results, which they just did last week. This is not a good time to be a buyer of banks in general. There will be an opportunity coming up. Historically they have a seasonal low around the beginning of October. It has a long-term support at around $58.

When the bad sales practices came out, they hit the banks. This bank admitted on their last quarter that they had no systematic issue. He would use that as an opportunity to buy. This bank had impressive numbers in their last quarter. Still trading at 11X earnings, and would be surprised if we didn’t see it doubling 10 years from now.

This has had its issues since the March 6 report on sales practices. They’ve had a few problems with their personal and consumer banking, which was really one of their growth engines for quite some time. The whole housing thing has brought down the excitement around the banks. If you don’t already have some of this in your profile, he would be picking away at it.

He likes this. It is bouncing off its 200-day moving average. He added a little more this last week. Very secure dividend with a yield of about 3.75%. Watch out with what happens to the Canadian economy, household debt, market, etc. Over 40% of their revenues come from international or US markets.

(A Top Pick Jan 20/16. Up 36%.) He likes their exposure to the US. They’ve done a lot of work in the last couple of years cutting costs and building their brand in the US.

This is big in Canada as well as in the US. Feels there is good growth potential in the US with a better US economy, and interest rates rising faster. Earnings came out today and they were very good. Dividend yield of 3.8%. (Analysts’ price target is $70.)

He likes US banking. This has a significant exposure and great success in the US, specifically in the Northeast. For US banks, he is more interested in those that went through the crisis, the ones that had to recapitalize and were trading at ridiculously low prices. Those banks today are having a reduction in the burden of regulations, a reduction in big multi-million-dollar finds, an increase in their ability to pay out earnings they are generating, but no longer have to save to build their capital base. TD may partially benefit from the regulations and an improving US economy, but it is relatively more expensive than the US banks, and there is less likely to be the same dividend growth.

Toronto Dominion (TD-T) or Royal Bank (RY-T) for a long-term buy? He is basically an investor in this one. It got off the mark before anyone else, in terms of getting a position in the US, and he thinks that is going to be very important. Has been a little disappointed with the results out of the US side, but thinks that is about to change.

He likes this bank and is still a buyer. He wouldn’t buy before they announced their earnings, which is coming next week. This is a good bank. Very strong retail presence in the US. They have a good record of raising their dividend.

She would buy this at the current price. The sector has pulled back, and this one is back a bit more because of their Sell practices that was in the news about a month ago. She doesn’t think that is inherent in their culture. On the premise that the US and Canadian economies are improving, banks are still reasonable. Expects this will generate earnings growth in the 8% range, and that their dividend will continue to be increased along the same pace as earnings growth. Yield of about 3.5%.

The Home Capital (HCG-T) story has depressed the Canadian financials. Also, there have been misguided and misleading stories from the US which has affected Canadian financials. This is a good entry point for Canadian banks in general. They are back to their average multiples. They start reporting in a week or so, and the numbers are going to be good. (See Top Picks.)

January 66 Call Option. The price of this is below where the stock is actually trading. You have until January, and he would not exercise an option early. If you exercised the option, you would be giving up the time value which is part of the option’s price.

The recent problems of aggressive sales practices could also be said of the other Canadian banks, and he does not think it is a game changer, but would use it as a buying opportunity. A year or 2 from now, no one is going to be talking about it. This is a great business and it is well run.

The banks all have broken topping patterns and have created a neck line where there is some support. Somewhere around $60, this might become interesting. Technically you wait for it to hit the point and you wait for it to bounce off.