Toronto-Dominion Bank (TSX:TD) stock trades for $100.94 at the time of writing. TD stock is up by around 38% from its 52-week low, and investors who missed the rally are wondering whether it might still be a good buy in August 2025. TD Bank is one of the most beloved investments of Canadian investors, being a staple in many self-directed investment portfolios.
It is easy to understand why it also finds its way into investor portfolios through various TSX Index funds. The bank has branches spanning from coast to coast, operates in arguably one of the best financial services markets, and is ubiquitous. Today, we’ll discuss why the bank stock might be a good investment to consider at current levels.
TD Bank
The recent rally in TD Bank share prices must be a big sigh of relief for long-term investors who didn’t shed their holdings in the stock during downturns. Canadian banks and the broader market saw a significant and extended pullback during the time central banks were raising key interest rates in the US and Canada. In a bid to cool inflation, the Bank of Canada and the US Federal Reserve had to slow down economic activity by increasing rates.
There were legitimate fears that the move would send the economy into a recession. However, the recession didn’t materialize. The excess savings that some businesses and many households built up during the pandemic can be attributed to helping keep the economy afloat. 2024 saw central banks begin reducing interest rates.
As inflation cooled to the target range, the Bank of Canada and the US Federal Reserve started easing borrowing pressure, effectively reducing the risk of loan defaults. Canadian banks, for the most part, saw share prices rally through the end of 2024. However, TD Bank lagged behind most others.
Trouble due to money-laundering issues with American regulators were a big reason for TD Bank lagging. After being under investigation, and being hit with a US$3 billion fine and an asset cap on TD’s American operations, the bank has been forced to look at alternative avenues for expansion.
The bank placed a new CEO in charge earlier this year, and it has since sold off its remaining Charles Schwab holdings for around $21 billion. It has also allocated around $8 billion for share buybacks. The bank plans to use the rest of the funds for other initiatives. It seems that the regulatory issues plaguing it are a thing of the past. The improvement in its performance in the chart above reflects that.
Foolish takeaway
Despite overcoming regulatory issues in the US, the bank’s problems are not entirely over. The threat of higher tariffs hitting Canada yet again poses a problem. The US enacting higher tariffs on Canada, Mexico, and Europe might force several international markets into a recession. Even if the recession doesn’t directly hit Canada, its impact on the US market will have consequences for the Canadian economy. Trading at almost 40% up from its 52-week low, TD Bank is in a good position. However, some investors might want to consider waiting for a pullback due to geopolitical factors that can bring its share price down to more attractive levels.
