Toronto Dominion (TD-T) — Stockchase (2024)

Mar 15, 2024, 8:00 pm

Consensus

Positive

Valuation

Undervalued

Similar

Royal Group Tech., RYG-T

Although Canadian banks are good for long term portfolio holdings there is a problem with TD since it has gone into the U.S. where it is just too competitive. TD is more like a regional bank there. Its numbers are fine but not fantastic. He switched to National Bank.

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It's been rangebound the past year. He owns it for income and potential growth, like this sector. Continues to be confident in TD, given its large position in Canadian personal and commercial, large US presence, capital markets, and wealth management business. Headwind continues to be the overhang of anti-money laundering regulations in the U.S. which hurt their attempted takeover of First Horizon Bank last year. Near-term they will continue to grow organically and buyback lots of shares and remediate with U.S. regulators. TD has the most excess capital among Canadian banks. They need to right their ship in the U.S., perhaps change executives. It will eventually return to its premium valuation.

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Very bullish on Canadian banks in general. Canadian regulators don't care if TD makes more US acquisitions, as long as capital ratios remain in line. US regulators care, however. Widespread regulatory crackdown on money laundering will result in a fine, insignificant in the grand scheme.

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Canadian banks have underperformed for 2 years in a row, which is very strange. Will probably be fined for money laundering issue. Lots of cash on hand. 10x earnings, 4.75% yield, paid to hold the stock. Should be able to beat expectations over the next year.

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It has had a rough go related to money laundering. It is well run but a laggard in the space and he wants to see a better technical picture which means more people are interested in it. It is better to look at something else - he owns National Bank and Royal Bank. He is not value focused and wants to see the tech picture to line up with the fundamentals picture.

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His third favourite of the 5 big banks, solid bronze medalist.

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He owns RY and TD in the space. More stable and diversified than the others.

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One of the better banks in Canada. Difficulties with First Horizon deal collapsing. Legal issues. Integrating Cowen. Reduced expectations, so possibility they'll beat those. Not expensive at these levels, great dividend, flush with capital. Interest rate environment will work in its favour.

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Overhang due to US issues from First Horizon plus anti-money laundering procedures. Still a great bank. Well positioned in US, very strong deposit base in Canada. Low funding cost for loans and mortgages. Lots of capital.

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Lots of excess capital gives them flexibility. Buy if you're looking for income.

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