The market plummeted even more this week thanks to American banks that fell into oblivion. Canadian banks soon followed suit, and it has left many holding up their hands in surrender. Honestly, we beg of the market, no more!
However, it’s time to shift your view during this trying time. Investors who have been doing this a while now should realize that long-term investing can certainly be achieved. Even when you buy during a downturn. In fact, especially if you buy during one if you’re choosing long-term TSX stocks.
And that means choosing the Big Six Banks. Yes, they may indeed be down right now. But these TSX stocks have proven time and again that they won’t remain down forever. Today, I’m going to discuss the three banking stocks I would buy in bulk during this downturn.
Toronto Dominion Bank (TSX:TD) is definitely the first of the batch I would consider right now. Shares of TD stock are down 14% in the last year, dropping off by 13% in the last month alone. So why would I recommend buying it? And what happened exactly?
It has to be said that of all the Big Six Banks, TD stock may be the most exposed to the American economy. TD stock is one of the top 10 banks in the United States, after all. However, America also has proven that it can recover quickly during an economic downturn. So, TD stock may rise quickly given this exposure, rather than go bankrupt.
In fact, TD stock has a number of things going for it. They include the numerous loan options on offer, its wealth and commercial management sector, as well as provisions for loan losses, as the other banks have. It’s, therefore, one of the TSX stocks that may offer a huge deal right now, instead of a drop. Especially since you can pick it up trading at 10 times earnings with a 4.48% dividend yield.
Now TD stock may be the most American exposed of the banking TSX stocks, but Canadian Imperial Bank of Commerce (TSX:CM) is the most Canadian exposed. This is why shares have fallen dramatically in the last few months, far more than those of its other counterparts.
Yet again, CIBC stock is just in a bad situation at a bad time. It has exposure to the declining housing industry, but doesn’t have as much exposure to emerging markets to allow revenue to climb as easily as others. That being said, it still has a lot going for it as well.
In fact, analysts still believe the stock could outperform in the near future. CM stock was helped along during its last earnings report with a “monster performance” from capital markets and improved net interest margins results, according to one analyst. Yet, shares are down 25% in the last year, dropping almost 11% in the last week alone. Yet again, I would consider picking it up while you can, trading at just 11.4 times earnings with a “monster” dividend yield of 5.78%.
Finally, if you’re looking for growth and dividends, with exposure to the American recovery, I would consider Bank of Montreal (TSX:BMO). It’s a balance between CIBC stock and TD stock, and similar to other banking TSX stocks with provisions for loan losses. However, the bank not only has major exposure in Canada, of course, but also growing exposure in the United States.
BMO stock is set to continue growing, adding $2 billion in incremental earnings thanks to the acquisition of Bank of the West. Furthermore, it has also added the Air Miles loyalty program to its arsenal. So, there are certainly many different reasons to consider BMO stock now and in the future.
It also offers value and dividends, trading at just 6 times earnings and with shares down 15.5% in the last year, and 8.5% in the last week alone. And with a 4.82% dividend yield to consider, there are many reasons to buy the stock now.