Is Canadian Imperial Bank of Commerce Stock a Good Buy?

Let’s dive into whether Canadian Imperial Bank of Commerce (TSX:CM) is a top buy, sell, or hold right now.

| More on:
Investor reading the newspaper

Source: Getty Images

For investors looking at top Canadian bank stocks, there are a number of factors to consider. These are obviously top dividend stocks many retirees and those nearing retirement consider for their passive-income potential. However, certain banks have better growth profiles than others, with varying levels of diversification tied to their business lines and geographic footprints.

One such stock I think is particularly interesting to look at is Canadian Imperial Bank of Commerce (TSX:CM). This leading Canadian bank is part of the “Big Five” and is more heavily exposed to the Canadian economy than its peers.

Let’s dive into whether this bank stock is a buy, sell, or hold right now.

What makes CIBC different?

Unlike many of its competitors in the Canadian banking space, CIBC has remained increasingly focused on the domestic Canadian market, with a considerable mortgage and corporate lending portfolio that positions this bank as a leading way for investors to gain exposure to the Canadian economy.

In other words, for those bullish on where Canada is headed over the next five to 10 years, this is a bank stock that may be a viable way to play this trend.

The Canadian economy has continued to provide slow but steady growth over time. However, with interest rates coming down faster than many of its G7 peers thanks to the Bank of Canada, some analysts project that growth could pick up. Indeed, if the country’s overall growth rate improves (and the credit quality of consumers and businesses as well) faster than the global market, this could be a top way to play this trend. Currently, opinions vary on this front — headwinds are starting to be seen in the housing market. But if Canada can once again weather the storm clouds on the horizon, this bank could be poised for a nice reversion rally moving forward.

Results matter

For investors considering investing in CIBC, I’d recommend watching the company’s incoming earnings reports closely. This is a bank stock that’s seen a relative discount compared to its peers for some time. And trading at less than 13 times earnings, one could make the argument that there’s some serious value here.

However, headwinds related to the housing market could provide some headwinds over time, particularly if the Canadian housing market cools considerably from here. We’ll have to watch how lending growth continues and see if CIBC can maintain its 7.5% EPS growth (the rate seen in recent quarters) in the coming year.

If the company can see sustained growth from here, its multiple may be validated, and higher highs could be seen in the coming quarters.

I’m cautious right now

CIBC is a top Canadian bank that’s seen a considerable amount of buying pressure of late as the outlook for the Canadian economy has improved. That said, I’m still remaining cautious with this name, as I’m not entirely certain that economic headwinds have abated domestically.

A soft landing scenario is certainly the consensus most analysts are now forecasting in the U.S. and Canadian markets. We’ll have to see how this plays out. For those looking at making a medium-term investment in this name, I think taking a cautious approach is likely warranted, though I think this stock is one that should do fine over the long term.

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Bank Stocks

Man data analyze
Bank Stocks

Is TD Bank Stock a Buy, Sell, or Hold for 2025?

TD stock has underperformed its large Canadian peers this year. Will 2025 be different?

Read more »

dividends can compound over time
Bank Stocks

Is TD Bank Stock a Buy for Its 5.2% Dividend Yield?

TD Bank stock offers a rare 5.2% dividend yield—can it rebound from challenges and reward contrarian investors? Here's what to…

Read more »

analyze data
Bank Stocks

Is BMO Stock a Buy for its 4.7% Dividend Yield?

Bank of Montreal is up 20% since late August. Are more gains on the way?

Read more »

calculate and analyze stock
Bank Stocks

4% Dividend Yield? I Keep Buying This Dividend Stock in Bulk!

If you find the perfect dividend stock, you never have to worry about investing again. And that's what you get…

Read more »

Man data analyze
Bank Stocks

Where Will BNS Stock Be in 3 Years?

Bank of Nova Scotia is primed for growth with a bold U.S. expansion, steady dividends, and a value focus that…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Stocks for Beginners

TFSA 101: Earn $1,596.60 per Year Tax-Free!

Investors don't have to buy some risky stock if they want tax-free high income. Instead, buy this top stock instead.

Read more »

data analyze research
Bank Stocks

TD Bank: Buy, Hold, or Sell Now?

TD is underperforming its large Canadian peers this year. Is a rebound on the way?

Read more »

data analyze research
Bank Stocks

A Dividend Bank Stock I’d Buy Over TD Stock Right Now

TD stock has long been a strong dividend and growth provider. However, recent issues could cause investors to think twice.

Read more »