Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), the third-largest bank in Canada in terms of total assets, has disappointed its shareholders in 2015 by falling about 11.5%, but it has the potential to quickly rebound and head significantly higher going forward. Let’s take a look at three of the primary reasons why this could happen and why you should buy the stock today.

1. Its strong earnings results could support a quick rebound

On the morning of August 28, Bank of Nova Scotia released very strong earnings results for its three and nine-month periods ending on July 31, 2015, but its stock has responded by falling over 2% in the trading sessions since. Here’s a quick breakdown of eight of the most notable statistics from the first nine months of fiscal 2015 compared with the same period in fiscal 2014:

  1. Adjusted net income increased 1.2% to $5.37 billion
  2. Adjusted earnings per diluted share increased 2.4% to $4.22
  3. Total revenue increased 0.4% to $17.92 billion
  4. Total assets increased 9% to $863.1 billion
  5. Total deposits increased 10.5% to $602.8 billion
  6. Total customer loans and acceptances increased 7.7% to $462.1 billion
  7. Total common shareholders’ equity increased 10.2% to $48.7 billion
  8. Book value per share increased 10.9% to $40.30

2. Its stock trades at inexpensive forward valuations

At today’s levels, Bank of Nova Scotia’s stock trades at just 10.3 times fiscal 2015’s estimated earnings per share of $5.69 and only 9.7 times fiscal 2016’s estimated earnings per share of $6.03, both of which are inexpensive compared with its five-year price-to-earnings multiple of 12.4 and the industry average multiple of 12.2.

I think Bank of Nova Scotia’s stock could consistently command a fair multiple of at least 12, which would place its shares upwards of $68 by the conclusion of fiscal 2015 and upwards of $72 by the conclusion of fiscal 2016, representing upside of more than 15% and 22%, respectively, from current levels.

3. It has a 4.8% dividend yield with an active streak of annual increases

Bank of Nova Scotia pays a quarterly dividend of $0.70 per share, or $2.80 per share annually, giving its stock a 4.8% yield at today’s levels. Investors should also note that the company has increased its dividend for five consecutive years, and its strong operational performance could allow this streak to continue for another five years at least. 

Is there a place for Bank of Nova Scotia in your portfolio?

I think Bank of Nova Scotia could be one of the market’s top performing stocks in both the short and long term. Its strong earnings results in the first nine months of fiscal 2015 could support a quick rebound, its stock trades at inexpensive forward valuations, and it is both a high-dividend and dividend-growth play. Foolish investors should take a closer look and strongly consider initiating positions today.

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Fool contributor Joseph Solitro has no position in any stocks mentioned.