In just a week, you’ll have the opportunity to contribute $6,000 to your TFSA. And for Canadians, the timing couldn’t be better as the NASDAQ, and S&P 500 have both fallen into a bear market with the TSX following close behind.
Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is by far the best bargain after the worst December since the Great Depression. It’s just not fair how badly TD Bank stock has been beaten up. It’s a premium bank, and I think it was the most attractive performer in the last round of quarterly result releases for the Big Six banks.
It didn’t matter. All the banks got battered, and TD Bank stock is still flirting with a bear market in spite of its quarter that I believe warranted a sustained rally to higher levels. While there’s a high degree of systematic risk at play, those who are willing to nibble away will be the ones that’ll be laughing their way to the bank after the recent bout of volatility is over with.
While it’s not a horrible idea to put the entirety of your $6,000 TFSA contribution to work in TD Bank stock at these prices, I’d urge investors to exhibit caution by initiating a third of a position come January with the intention of initiating the other two-thirds of the position a incrementally over the next few months.
You see, we’re in the middle of a bear market, a crash, a brutal trade war, an economic slowdown, or a recession.
Whichever term you want to use, the decline could become a lot worse, so it’s not a good idea to buy a full position all at once despite the depressed valuations all around us. Nobody cares about individual companies right now, and until Mr. Market can finish puking, you can’t expect normally positive events to send stocks higher anymore.
The macro picture doesn’t look good for any bank, and although there’s no telling when the pain will end, you can rely on TD Bank to hold its ground as the storm moves in. TD Bank has a solid balance sheet and enough liquidity to bounce back from another Financial Crisis. Moreover, investors can expect to continue to pull in the stable and continuously growing dividend regardless of what ends up happening to the global economy.
TD Bank will be knocked down, but it won’t be knocked out. And should the trade war resolve itself peacefully, we could see TD Bank stock come roaring back in a big way as quarterly results begin to regain control of market moves.
Stay hungry. Stay Foolish.
Fool contributor Joey Frenette owns shares of TORONTO-DOMINION BANK.