Desjardins Analyst: Now is the Time to Buy Canadian Banks

If you have been trying to guess the bottom of the slide in Canadian bank stocks, then you are not alone.

But now is the time to get back in to those battered banks, says Desjardins Securities Research analyst Michael Goldberg.

“Valuations remain exceptional and we believe it is now time to begin accumulating,” Mr. Goldberg says in a note.

There will be more bad news out of the banks, which have announced massive subprime-related writedowns and are also facing the prospect of weakening results from operations thanks to the economic slowdown in the U.S.

However, bank stock prices should be buoyed by a “a classic group rotation” last week that saw investors switch from oil and gas, gold and base metal stocks back to financials, following support from the sector from the U.S. Federal Reserve last week, Mr. Goldberg said.

Desjardins is upgrading Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CM), National Bank of Canada [NA/TSX] and Royal Bank of Canada (RY) to “buy” from “hold.”

Toronto-Dominion Bank (TD) and Bank of Nova Scotia (BNS) have not seen their stock prices hit as heavily as the peers, and remain the top pick at Desjardins.

BMO vs. CM vs. RY vs. TD vs. BNS 1-yr chart:

Comments

[Victhom:]

BMO have over $14B US Commercial paper and CIBC also taking more risk with Portfolio....

TOP Bank in Canada is:

#1 RY
#2 TD
#3 BNS

2008 Mar 25 10:30 AM

[deefree:]

what is percentage of these assets to total loan portfolio for these banks?
1) sub prime mbs
2) other abs
3) consumer credit
4) construction lending

also, please compare total bank market captitalization in canada to gdp of canada and compare that to other OECD countries. then what you have to write might be useful instead of just another opinion.

2008 Mar 26 07:28 PM