Shares of CIBC (TSX: CM) didn’t just beat the TSX Index in 2025, it absolutely crushed it, and with so much momentum behind shares of the Big Six Canadian bank stocks, it doesn’t feel like the market-beating days are over, especially when you consider the lagging years that CIBC and its peers suffered through prior to the latest bank rally.
Undoubtedly, the big banks have made up for lost time, and, as always, there are questions surrounding whether the bull run is worth getting behind if the easy money has been made, leaving potentially latecomers at risk of losing money while having to settle for a yield that’s on the lower end of the range.
Of course, if you sought gains and yield, the golden time to buy shares of CIBC and other banks was around two years ago. With a fairly low 3.42% dividend yield (yes, not even shares of CM yield more than 4% anymore) and an explosive amount of momentum behind the stock, it certainly feels a tad riskier to place a bet despite the incredible past couple of quarters delivered by CIBC.
While CIBC is doing incredibly well, with more good days again, the valuation is higher, and the technical picture might look less attractive, especially if recent market-wide momentum begins to reverse.
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Do shares of CM look a bit toppy after Tuesday’s market-wide tumble — one that saw CM take a 2% hit?
Perhaps mildly, and while greater downside could make for a better entry point, I certainly have no objections to investors keen on buying right here at around $125 per share after a modest dip from its highs. Of course, you should have cash on the sidelines to buy at $115 and perhaps $100 or lower should the banking dip have room to run lower.
In any case, I view CIBC as a fair buy at current valuations. Today, the stock trades at 14.6 times trailing price-to-earnings (P/E), which isn’t expensive, but it’s also not dirt-cheap, especially given the somewhat recent history of single-digit P/Es. Either way, I’d personally put CIBC stock in the “hold” category.
It’s a great performer, but one that I believe is a tad on the overheated side. The capital markets business is running strong, but until the yield can at least hit 4% again, I’d be more cautious with the name.
So, if CIBC stock is more of a hold than a buy, what should investors look to instead? While I still like the banks over the long term, I’d say the utility scene is looking more intriguing, especially considering the much lower betas.
Waiting for a pullback could be a good move
Today, CIBC stock has a 1.29 beta, which could put it at increased risk of amplified downside relative to the TSX Index. Of course, more downside means a higher chance for a more compelling entry point. If you’re patient with the name, I think there will be better days to step in as a buyer.
In short, CIBC is a great bank, but its stock, I think, doesn’t offer much for value hunters. So, for now, it’s more of a nibble than a buy for those who don’t own the name, and a hold for those looking to add to their positions.
