Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Top 3 Canadian Bank Stocks to Buy Before Earnings

Published 2019-05-19, 07:44 a/m
Updated 2019-05-19, 08:06 a/m
Top 3 Canadian Bank Stocks to Buy Before Earnings

Top 3 Canadian Bank Stocks to Buy Before Earnings

Top 3 Canadian Bank Stocks to Buy Before Earnings

While many companies have already reported their quarterly earnings, the big Banks are still weeks away from doing so. With the economy doing well and a good jobs report to confirm that, here are three bank stocks I’d be looking to buy before they release their quarterly results.

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is a pretty exciting investment for a bank stock. There’s a lot to like about the CIBC and why investors might be bullish on its future. When the company made a big acquisition a few years ago to make an entrance into the U.S. market, it created many growth opportunities for the bank stock.

In its most recent fiscal year, the bank’s net revenues rose by 9.5% and I wouldn’t be surprised to see similar growth rates in the future. As strong as the Canadian economy is, the U.S. one is arguably doing even better and could result in even stronger results for CIBC.

Despite the bank now having a strong presence south of the border, investors have still not been willing to pay a higher multiple for the stock, which is why it could be advantageous for investors to take advantage of that now. At a price-to-earnings ratio of around 10, CIBC trades lower than some of its peers and could be a bit of a bargain pick up today.

Royal Bank of Canada (TSX:RY)(NYSE:RY) is another good bank stock to buy before its earnings come out on May 23. Although the company’s CEO expressed concern a few months ago about the possibility of big tech entering the industry, RBC’s stock is about as safe as can be. That’s why buying it ahead of its earnings release might not be a bad idea. Although we’ve seen many stocks get off to strong starts to 2019, bank stocks have been a bit softer in terms of performance, and RBC has been no exception.

While that might seems like it could be problematic, a strong earnings result by RBC could ignite the stock and remind investors why it’s a good buy. Even if RBC misses or underperforms, it’s unlikely that we’ll see a big sell-off of a blue-chip bank stock. If that were to happen, it would only make RBC an even better buy, as we know that over the long term the stock is going in one direction only: up.

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) will also be releasing its earnings on the 23rd. Like RBC, it’s an attractive buy not only because it is low risk, but also due because of its strong position in the U.S., where the economy continues to be performing well. In its most recent quarter, TD’s net revenues rose by 6.9%. The big question will be whether the bank will be able to come close to that with mortgage growth being very slow, which could trickle into the company’s quarterly results.

The good news is that we live in a world of expectations, and so analysts have likely factored those challenges into their expectations. That’s likely also why investors haven’t been overly bullish on TD’s stock lately. There’s definitely some nervousness around TD and other bank stocks right now, but that has also made it an attractive time for opportunistic investors to buy in while prices are still low. However, a good earnings report could change that in a hurry.

Fool contributor David Jagielski has no position in any of the stocks mentioned.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2019

This Article Was First Published on The Motley Fool

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.