Toronto-Dominion Bank (TD.TO)

Money-laundering issues made them rethink their thesis. Limits on US personal banking growth mean it can't execute on expected numbers. Rotated out and into RY with its strong wealth management, giving their portfolio the needed US exposure.

Chose this Top Pick yesterday, and applauds the disciplined fiscal governance announced today. Brand tarnished on both sides of border, but it's fixable. New CEO can reset the strategy. He'd support divesting Charles Schwab. Very competitive Canadian personal and commercial banking franchise, and they may lean harder into this. Discount brokerage may become more competitive. Yield is 5.1%.

Its growth strategy was built around the US, but is now dead after the money-laundering penalty. Wells Fargo was punished for a long time and so will TD. It'll be rangebound for a while.

Likes it and bought it 3 weeks ago on a dip. Run well and has high capital levels. Pays a nice 5.3% dividend. Doesn't know if the price will fall this summer, but you can buy some now and more later to averaging in, if you're long term. The penalty was so severe that TD can't buy a company in the US for a while, unless Trump de-regulates. More likely is collecting the dividend and seeing meager stock growth. 

He likes buying a company when they've had a corporate issue, short of toxic, like TD. TD is very cheap vs. RY. Wait till this falls to $70-75. He's in accumulation mode with this. We'll see what the new government's policies are. TD is one of his few banks.

Hasn't performed as well as others. Hasn't sold or trimmed, but added. Long-term play for next 5 years, don't expect a recovery in the next few months. Management changes and US asset cap could lead to more weakness. Premier asset in US and Canada. Canadian earnings very strong. Trades at steep discount.

The chart shows a downtrend since early 2023 and is testing the bottom at $75. Meanwhile, its peers like Royal are breaking to the upside. He expects a wider market correction to come, too, so you don't want to hold a laggard like this. You could nibble at TD, but he sees more downside.

It's painful getting into trouble with US regulators (fines and restrictions). How long will it take the market to digest the extra oversight? Typically, at least a year; TD could be dead money for a couple of years. He has sold TD shares. You need a long time frame. He wouldn't buy TD now.

Will be in the penalty box for a long time. For comparison, look at the progress of WFC since 2018.

Lowest multiple of the peer group. Lots of negative sentiment has put it under pressure, which might give a bit more upside over the longer term, while still providing you with income.

This is his pick for income-seeking investors. Not a ton of robust growth in Canada, US growth has been curtailed. You don't buy this for growth. You're going to collect your dividend, over 3-5 years you're waiting for some kind of multiple expansion, and your total return should be quite good. Lowest PE multiple of the peer group. Protected dividend, great capital position.

Still a great domestic franchise, and they'll figure things out in the US. One thing they have to consider is exiting the US completely. Canadian banks have all had a history with the biggest underperformer being the next outperformer (think CIBC). Yield is 6%.

She sold some shares after the penalty was announced, because the measures would cap their US growth, an attractive area for growth. Their discounted valuation reflected concerns. They can still grow in Canada. It trades under 10x PE and the dividend is over 5%. If TD can get their act together and grow earnings, she PE could rise.

Sold on the money-laundering news. The fine wasn't the issue; it was the lid on acquisitions and cap on asset growth.

Will underperform for a little while as they deal with issues, but it trades cheaply at 9.5x PE. Question is: Will earnings fall? He likes TD below the current $75 and would have a half-weight position, but there's a chance this dips below $70, then would add more.

It reached its lowest level on Friday in four years but is holding its guidelines. There is an over-reaction to the asset cap in its U.S. component. 9 to 9 1/2 X earnings is too much of a discount. It has the potential to outperform next year.