Toronto-Dominion Bank (TD.TO)

Canadian banks could experience some tougher sledding, going forward next year. Mortgage origination is probably going to be down. Rising rates are positive on one hand, but dividend stocks are kind of negative. Don’t bother getting in now as there is not a ton of upside. Earnings are not going to accelerate for the next couple of years. Better places to be.

TD is probably the best managed but does not make it the best bargain. ROE is lower. TD is moving with the momentum of the group. Investors have probably been left disappointed and that is why we have seen a check back in this bank. Let it go for a bit and see if we can get some better prices.

(Top Pick Dec 17/12, Up 27.91%) 2 for 1 split in January. We are in a super charged growth market and these will not do as well as they have.

Best of breed. Improving growth rates in North America will benefit them. CEO made the point there will be potential acquisitions in the credit card area and would increase customers and would give the ability to cross sell. If rates start to go up, net interest margins will go up and will benefit them.

Made some great acquisitions. A very strong franchise. Not expensive at 1.9X book. 3.45% dividend yield. Trading at 11X earnings.

Good for a 10-15 year hold? He would stage into this by buying a 3^rd now, a 3^rd in January and a 3^rd in February. Generally you get a rally at year end, and then things pull back a little. You might be able to get it in the mid-$90s instead of at its all-time high. Feels they have great upside on a US recovery and a very solid position in Canada.

(A Top Pick Jan 30/13. Up 91.6%.) This was to Buy Jan 2014 $90 Calls at $1.60. (Because of the split coming in January, this will be a $45 Call.) Thinks there is more to come on this and you still have a year.

Would like to buy this bank but it keeps going up every day and feels he is chasing it. Buy now before it goes higher or can you see a pullback? This is always a dilemma. You have to establish a price that you want to pay for it and you buy it at that price. He would take a half position. There will probably be a Santa Claus rally that we get every year. The 1^st quarter is always a good time to be in the marketplace.

When you get something unexpected like today you are okay.

You are getting a bit of a pullback in Canadian banks. There are all different reasons. They had a good run and are consolidating their gains. National bank does not have good performance in developing markets, vs. TD. The US is the most attractive area for banking. But he would choose TD in Canada because they are doing a good job in the US.

Has exposure to the US and a recovering US market with their recent acquisitions. Stellar management team. Even though they are up, they can continue to consolidate and these are the kind of consolidations you want to buy.

Out of all the Canadian banks, this would be his Top Pick. From a long-term perspective, they have outperformed all their competitors. Really well-run bank. Moderately bullish on banks, but you buy them when they have pullbacks. This one is trading near a 52-week high. He sees better opportunities elsewhere.

Better to get in before the stock split or wait until after? Banks had a great run. If you didn’t get this one at $70, you missed the run but he feels there is a little more upside to go. As long as the housing market stays in strong shape he sees 10%-15% more upside over the next 12 months for all the banks. His favourite is National Bank (NA-T).

Loan growth has returned. Good earnings last quarter and he expects more of that going forward. No problem holding it. Earnings growth high single digit. If it went down 5 or 10% he would be adding to his position.

Likes the banks, but not as bullish on them. You are probably fine to hold them now but he sees better opportunities elsewhere. Banks are going to grow 5%-7% and pay a nice dividend yield but valuations have risen a little bit.