Stock market volatility is back, with the S&P 500 nosediving again while the Nasdaq 100 dipped into correction territory. Undoubtedly, the TSX Index is off just shy of 5%. And while the recent ripples in the market caused by tariff fears make it very hard to see what the future holds, I still think it’s worth the while to be a net buyer on the dip. Sure, it’s not easy to do when volatility works against you, but sometimes, you just have to hold your nose and at least buy something on your radar that looks cheap.
Indeed, if you’ve yet to purchase anything after the TSX Index’s “half correction” of sorts, now seems like a great time to build a list of names and entry points you’d hope to get. As the sell-off intensifies, perhaps you will get an opportunity as others sell on fear with the intent of asking questions later.
While tariffs may be delayed again, investors are starting to view Trump tariffs as a serious threat to economic growth. Undoubtedly, the lifting of tariffs could cause a sudden rebound in markets, but until there’s more clarity on the end of brewing trade war, volatility is going to be the norm, perhaps until the summer.
The Canadian bank stocks such as CIBC (TSX:CM) and National Bank of Canada (TSX:NA) have been steadily sagging in recent months. Though the banks won’t be able to avoid the pains that come with a recession and perhaps stagflation, I think that you’re getting great businesses at a pretty stellar price of admission this March, as tariff terrors work their way through the Canadian stock markets. But which name is the better bet at the time of writing?
CIBC
CIBC stock is now down around 15% from its recent all-time high. With a heavy book of Canadian mortgages, CIBC may very well experience added pressure should Canada’s economy tilt into a recession. Though more domestic mortgages are seen as concerning for some, I think that Bank of Canada (BoC) rate cuts could ease some of the blow of tariffs. Still, lower rates can only go so far.
So, if tariffs do cause a considerable amount of job losses, perhaps a lifting of said tariffs won’t be enough to help the Canadian economy get back to where it was. Perhaps the “structural” damage that tariffs could cause may be more like scars that will take a very long time to heal. Either way, I think CM stock is a market bargain at 10.5 times trailing price to earnings (P/E). The 4.65% dividend yield is also nice to collect while you ride out the market storm.
National Bank of Canada
National Bank of Canada is another banking bargain worth checking out this March as shares sink deeper into correction. Now down more than 17%, a bear market may not be too far off, especially if tariffs cause the TSX Index to fall into an official correction (10% drop) itself.
Either way, I like the valuation (10.6 times trailing P/E) and the robust management team that’s helped lead the number-six bank to outpace its peers in recent years. Despite the latest correction, shares of NA are up 86% in five years — not a bad return for a relative lightweight in the banking scene. With a nice 3.92% dividend yield, I’d not hesitate to buy the name on weakness if you’re in the bank for a bank stock. Personally, I like NA slightly more than CM at these levels.
