Banks are the aircraft carriers of the economy. Big strategic must not get hurt too badly. If they’re OK you’re in the game sort of. If they get hurt you’re dead meat. Check out the difference between four major US Banks and the big five Canadian Banks. In all cases the PE ratio are attractively valued and the dividend yield is superior. check out these stat:
Bank PE Dividend %
C 12.59 0.10
JPM 12.16 2.80
WFC 11.20 2.80
BAC 21.96 0.30
TD 13.10 3.60
RY 12.16 3.90
CM 10.24 4.40
BNS 12.01 3.90
BMO 10.98 4.10
George Gutowski writes from a Caveat Emptor Perspective.
Canadian banks all have a year-end of Oct 31. Relax the results are all in and locked up. Earlier this summer they were under pressure because some American Hedge funds though Canadian Real Estate was over valued and a bubble was about to burst.
Some American hedge funds have lost money not understanding the dynamics of the local Canadian economy. Read substantial energy reserves, almost non-existent federal deficit and no culture of sub prime mortgages.
Share values have appreciated and speculation abounds about stock splits. Canadian banks have not split for about six years but they do have a historical tradition of using this contrivance to enhance liquidity and induce more retail investors.
Studies show that eventually stock splits have no long-term effect on securities valuation. But in the short-term you can expect good news for year ends and stock split whispers to drive up prices and then settle down.
Short term traders start your engines. Fundamental investors go have a coffee and just watch.
George Gutowski writes from a caveat emptor perspective.