Toronto-Dominion Bank (TD.TO)

The best Canadian bank to own for foreign exposure, considering the low Cdn$. Have done a great job of building their US retail franchises. Also, own a piece of TD Ameritrade (AMTD-N), which is a big beneficiary of the strong markets in the US. However, Canadian banks in general are facing headwinds with weak energy prices, the difficult capital market activity and low rates putting pressure on net interest margins.

She can easily see this being up 10%-15% higher a year from now. The Canadian banks have all pulled back on concerns relating to energy and the fallout of lower fuel prices. Alberta housing is coming off, but other parts of the Canadian market are still robust. Have good US exposure through their acquisitions of the last few years.

For a long term hold, Bank of Nova Scotia (BNS-T) or Toronto Dominion (TD-T)? Of these 2, he prefers this one. Over many years they have expanded their footprint in the US and are quite strong along the eastern sea coast. They have more employees in the US than they have in Canada. Even though there are lower ROEs in the US, you are going to repatriate some of those earnings back to Canada, giving a benefit of 24%-25%. Extremely well-run.

If the Canadian economy slows, it makes people a little concerned going on from here. Any time you have a bit of a blip in respect to credit related to the banks, it is sort of exacerbated. As a shareholder, you are not going to get hurt like you would in the US, but you can definitely feel it. He is a little concerned because the credit cycle has been very favourable for a long period of time. It is a cycle and it does come back. He is generally underweight banks and would want to wait before getting a little more comfortable.

This bank has more branches in the US than any of the Canadian banks, and more as a proportion of their total ranking activity than any of the others. The weak Cdn$ means that whatever dollars they make in the US comes home and is worth more. Feels Canadian banks in general are oversold, and that this one is not being given enough credit for their footprint in the US.

Don’t let this market push you out of this stock. There is no disaster in front of these Canadian Banks waiting to happen. It is going to be slow going forward, though.

Toronto Dominion (TD-T) or Bank of Nova Scotia (BNS-T)? He does not have a favourite between these 2. They have different characteristics. The main point at the moment is that the banks are tending to be under a bit of pressure. Chartists will tell you they have broken out of their awesome moves over the last few months, and will continue lower for a while. This is partly to do with interest rates and partly to do with the profits they will make on narrow spreads.

Would you Short this for CGI (GIB.A-T) or West Fraser (WFT-T)? He wouldn’t Short a bank, even if he believed the banks went $5 lower. He would maybe Sell a Call. He doesn’t want to play the negative yield. This is a dangerous game. Banks have a tremendous ability to make money over the long term. This one has 24% of its earnings from the US and will benefit from a weaker Cdn$.

He loves it and has owned it for a long time. Canadian banks are pretty cheap these days. They had a nice pullback and you can buy a great franchise in Canada at a really good multiple. This is a company that has developed a brand name in the US that no one has been able to accomplish over the years.

(Top Pick Jan 22/14, Up 7.99%) Likes their exposure, and likes it better than RY-T’s. TD-T is expanding like crazy in Florida. Maybe they will acquire a regional bank down there, although the Canadian dollar would be a deterrent.

(A Top Pick Jan 7/14. Up 7.68%.) He owns quite a bit of this because of its US exposure. They have room to grow profitability in the US as the economy improves. Thinks Canadian banks are down to the point where you can buy them again for double digit returns over the next 12 months.

This is a special kind of bank as you get some upside from their US position. When you have about 50% of your assets valued in US$’s, you should have an upward pressure in the share price. He wouldn’t be surprised to see the stock go back to $55 very quickly. However, it is all on earnings. They have said they are going to do a lot of cost-cutting. With a dividend of about 3.5%-4% and price appreciation of 5%-6%, you are probably looking at a 10% rate of return, which is not bad.

All the banks have had a pretty good run over the last year. They have really led the Canadian market up. This bank’s business, with their US exposure, is probably set up pretty well relative to some of the other Canadian banks. The US consumer is getting a big benefit out of this price drop in oil, which probably stands to filter back through some of their branches in the US. This is one of his core bank positions. This is a decent time to average into a bank.

Likes banks as a group. Have made various acquisitions in the US over the last few years, so they have a nice presence in the states, which is about 21% of their profits. Has one of the lowest exposures to energy in the group. They have a 40%-50% target payout ratio. Based on the current dividend that is in place and the earnings expected this year, the earnings ratio is about 41%. This tells her there are going to be dividend increases of 6%-8%. Trading at about 11.5X forward earnings and ROE is in the high double digits. Yield of 3.62%.

Bank of Nova Scotia (BNS-T) or Toronto Dominion (TD-T)? He thinks banks are the place to be. Financials overall are relatively good places to be in the current environment. Bank of Nova Scotia (BNS-T) and Toronto Dominion (TD-T) overlap in a lot of areas, but are quite different in terms of their overall characteristics. Scotia is a much more international bank and has been penalized somewhat lately, because of that. TD has done relatively well over the last while. They have certainly made a lot of progress in terms of positioning themselves in the US, but have also some a lot of money in behind that investment, so he feels it is a “wait and see” from a shareholder perspective. Scotia is currently selling at a discount to TD. If you were putting money in to either, on a long-term view he would rather put it into Scotia.