2 Super-Cheap Bank Stocks to Buy Today

Canadian Western Bank (TSX:CWB) and Laurentian Bank of Canada (TSX:LB) fell into oversold territory after earnings.

| More on:
edit Four girl friends withdrawing money from credit card at ATM

Image source: Getty Images

Earlier this month, I’d discussed two of Canada’s top bank stocks that had set off appealing buy signals. Today, I want to look at two regional bank stocks that have fallen into discount territory after the release of their fourth-quarter and full-year results in 2019. Not only do these stocks look cheap, but both banks boast an encouraging dividend history.

Canadian Western Bank

Canadian Western Bank (TSX:CWB) is an Edmonton-based regional bank with a central focus in Western Canada. It has been determined to branch out into the Eastern region over the past few quarters, and this has led to more growth. The bank released its fourth-quarter and full-year results for 2019 on December 5.

Its bank-raised deposits posted 12% growth and rose to $1.5 billion for the full year. Adjusted cash earnings per common share increased 5% year over year to $3.15. Like its Big Five peers, Canadian Western’s fourth quarter was disappointing. Total revenue rose 6% to $221 million, but its net interest margin fell six basis points to 2.55%. It was also down five basis points from the previous quarter.

Shares of Canadian Western have dropped 7.5% over the past month as of late-morning trading on December 18. The stock is still up 27% so far in 2019. Its shares still possess a price-to-earnings (P/E) ratio of 10.4 and a price-to-book (P/B) value of 1.1, which is decent value relative to its peers. The stock last had an RSI of 30, which puts it just outside technically oversold territory.

The bank last increased its quarterly dividend to $0.28 per share, which represents a 3.4% yield. Canadian Western has delivered dividend growth for over 25 consecutive years.

Laurentian Bank

Laurentian Bank (TSX:LB) is a Quebec-based regional bank stock. The bank battled a crisis with its mortgage underwriting that was resolved in 2018, and its stock has since recovered over the course of this year. Its shares have fallen 3.7% over the past month. In April, I’d discussed comments made by Steve Eisman, the money manager made famous in the book The Big Short. Eisman said he was targeting Canada’s bank stocks, and Laurentian was one he specifically mentioned.

Shares of Laurentian have climbed 22% in 2019 so far. The bank released its fourth-quarter and full-year results for 2019 on December 4. Total revenue fell 7% year over year to $968.5 million, and adjusted net income plunged 20% to $193.2 million. However, net interest margin was up three basis points from the previous year. In the fourth quarter, Laurentian announced the launch of its digital offering, as it looks to bolster its presence beyond branch banking.

The stock last had a P/E ratio of 11.8 and a P/B value of 0.8. It has recovered from technically oversold territory since its earnings release, but it still a worthy target ahead of the holidays. Laurentian declared a quarterly dividend of $0.67 per share in December, which represents a tasty 6% yield. The bank has delivered dividend growth for 11 consecutive years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Bank Stocks

Question marks in a pile
Bank Stocks

Should You Buy Canadian Western Bank for its 4.8% Dividend Yield?

Down 35% from all-time highs, Canadian Western Bank offers a tasty dividend yield of 4.8%. Is the TSX bank stock…

Read more »

analyze data
Bank Stocks

The Average Canadian Stock Investor Owns This 1 Stock: Do You?

This Canadian stock has about 49% ownership by the public, and with growth and dividends to consider, it's a top…

Read more »

falling red arrow and lifting
Stocks for Beginners

1 Dividend Stock Down 18% to Buy Right Now

CIBC (TSX:CM) is a strong dividend stock investors should certainly consider not just for passive income, but future growth as…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Tech Stocks

Forget TD Stock: 2 Tech Stocks to Buy Instead

TD remains a solid income stock but two outperforming tech stocks are better buys for their strong growth and upside…

Read more »

Question marks in a pile
Bank Stocks

Where Will Royal Bank of Canada Stock Be in 5 Years?

Royal Bank's continued focus on a strong capital position plus its acquisition of HSBC will likely ensure prosperous times ahead.

Read more »

Payday ringed on a calendar
Bank Stocks

How to Build a Bulletproof Monthly Passive-Income Portfolio With Just $10,000 and TD Stock

TD (TSX:TD) stock has been a poor performer over the last few years, but could be a big passive-income winner…

Read more »

Man considering whether to sell or buy
Bank Stocks

Is RBC Stock a Buy, Sell, or Hold?

Shares of Royal Bank of Canada have delivered game-changing returns to shareholders in the last two decades. Is RBC stock…

Read more »

Dice engraved with the words buy and sell
Bank Stocks

Is Scotiabank (BNS) Stock a Buy, Sell, or Hold?

Let's dive into whether the Bank of Nova Scotia (TSX:BNS) remains a solid buy or if it's more of a…

Read more »