The Canadian bank stocks could be ready to march higher, even if the tech trade sinks and drags down the rest of the broader stock market. Undoubtedly, some Big Six Canadian bank stocks have started inching higher in the last few months of 2024. With some of the financial scene under mild pressure to end the year, dip-buying investors may wonder if it’s time to book some of the profits or if it’s a great time to purchase more shares at a discount before the next potential leg up. Indeed, when it comes to Canada’s top banks, a larger market cap isn’t always better.
In fact, when it comes to relative lightweight in National Bank of Canada (TSX: NA), the bank has been able to outrun many of its much larger peers in the space.
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National Bank stock looks to be on sale in January
At the time of writing, shares of National Bank of Canada are down just north of 7%. The $44.3 billion bank may not be the largest and most dominant on the scene, but with an incredible management team, a solid recent pace of appreciation, and room to run in Canada’s banking scene, I certainly wouldn’t count the number-six bank out, especially after its historic merger with regional Canadian banking star Canadian Western Bank. Indeed, it’s a needle-moving banking deal that could really give National Bank a nice growth edge over some of its larger rivals.
Over the past year, NA stock has outpaced the TSX Index, with close to 26% in gains. Though National Bank isn’t all too far away from its all-time highs, I think that the latest mini-correction could drag on over several months. As such, those looking to buy the dip had better be prepared to have a game plan should shares continue to sink (perhaps into an official correction, which is a 10% drop from peak levels) going into the Spring months.
Either way, National Bank looks quite cheap despite its past year of market-beating performance. Shares are currently going for just 12.18 times trailing price-to-earnings (P/E) while offering a respectable, though not sizeable, 3.13% dividend yield. Of course, there’s more to a bank stock than just the yield. As National Bank readies for more interest rate cuts from the Bank of Canada (the BoC) in 2025, I think the bank is poised to keep delivering solid quarterly numbers relative to expectations.
The bottom line
Indeed, National Bank of Canada has been faring quite well against quarterly expectations over the past year. More recently, the bank topped profit expectations during its fourth quarter. Management noted “disciplined execution” and “strong organic growth” as primary reasons the bank was able to hit its annual goals.
Going into the new year, the bank hopes to do the same as it pulls heavily on the growth lever. I wouldn’t dare bet against the bank as it looks to add to its strengths in what’s sure to be a volatile year. If anything, National Bank shows us that it can punch well above its weight class. And at $130 and change, I think the stock is a fantastic buy.
