Toronto-Dominion Bank (TD.TO)

Bank stocks have all had a pretty good run recently. This would be one of his preferred picks. Likes its US exposure. Good dividend growth potential. Feels you could buy this here, but wouldn’t be surprised if there was a 10% correction lower and that it got down to the low $50’s. Consider Wells Fargo (WFC-N) as a good growth opportunity. Expects US banking operations will probably outperform the Canadian banking operations.

Prefers owning US banks to Canadian banks. If you want to own a Canadian bank that has US exposure, you can do that through this bank. US operations are large, but are underperformers as far as returns to the bank. You are better off owning a pure US bank. He has no interest in the money centred banks, prefers regional banks.

Shares are performing much better on the TSX relative to the NYSE. How come? The short answer is currency. The spread right now is about 7%-7.5%. Because they report in Cdn$’s they have to convert and this is what causes the spread. This is more of a US bank than a Canadian one in that they have more branches in the US and more than 50% of their revenues comes from the US. A good name to own, because it does give you exposure to the US.

Have a good amount of US exposure. Things are a bit slow in Canada, but the US side is picking up momentum. He thinks that will show up in earnings. Bank stocks in general have taken a back seat for a while. They have built a good base here and you will see them moving higher.

In his opinion, this and Royal (RY-T) are the best in class. You not only get stability from the Cdn retail, but also half their assets are in the US. They are just beginning to get synergistic between the 2 countries. Cheap relative to Book Value.

The valuations on banks are not hugely challenging but the growth targets are not high. He does not think credit issues in Alberta are significant. They are okay and you get almost a 4% dividend. It won’t be the best year for them but that is in the price. A good long term place to be and he likes their US exposure.

His favourite. The best exposure to the US which is the best international market to be in. Not a bad time to average in. He does not see huge catalysts but also not a lot of downside.

This would be his top bank given the push that they have in the US. They have had great success in being able to build out there retail franchise. Approximately 22% of their adjusted earnings come from US retail banking. In terms of being able to compete and benefit from a US tilt, this is probably one of the best banks. Trading at a reasonable valuation of 11.3 X forward earnings. Dividend yield of 3.78%.

You really have to give management the benefit of the doubt. They have proved that they can actually grow and add business lines. This is the premier bank. The 2^nd largest. Have more branches in the US than it has in Canada, so are no longer restricted by what is happening in the Canadian economy. Banks have had a period where their bad debts have been fairly low, but are now starting to pick up.

Sold out of his Canadian banks back in mid-January. A little bit bearish on Canadian banks in general. Until the pattern of lower highs and lower lows finishes, he doesn’t think he would buy this. The fundamentals are great for the banks right now.

A wonderfully well-run company. Dividend is great. Stock has dropped, but just don’t pay any attention to that. The fundamental value of these businesses changes far more slowly than what the traders would have you believe. If it gets really silly, you buy more of it.

Came out with encouraging news the other day. They are expanding in the US and it has been underperforming. Last quarter their US side offset a decrease on the Canadian side.

Banks should start to run here. They have all fallen off a bit. The chart on this shows a big rounded top. It would need some sort of break out to a new high, which would get it above $59. If you’re buying this simply for the yield, this looks reasonable. Expect some volatility, but he wouldn’t worry about it on a long-term basis.

You are going to have a solid 8-10% total return. The key factor is how well it does in the US. As the US economy picks up it will have a positive effect on Canada.

One of his favourite banks, and he likes it because of its US exposure. Their exposure tends to be very close in Northern US, New York state particularly. However, they are expanding rapidly in Florida. If we are positive on the US economy, then a bank operating in that environment is probably going to do just fine. A good investment.