AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
- The TSX Composite Index is down over 9.9 per cent and so is arguably on the brink of a correction
- The last month accounted for most of the losses seen by these stocks year-to-date and so they may be said to be on the dip
- The S&P/TSX Capped Financial Index is in the red by 7.3 per cent and by that comparison, these stocks have done better
On Monday, May 9, the TSX Composite Index fell 3.07 per cent to under 20,000 points. The benchmark index is now about six per cent in the red year-to-date (YTD) and about nine per cent down quarter-to-date.
Considering its all-time high of 22,213.07 points posted earlier this year, the benchmark index is down by over 9.9 per cent and so is arguably on the brink of a correction.
Canada’s big banks are some of the best in the world and certainly having their stocks in the kitty is worth considering. Let’s look at a few of them.
Royal Bank of Canada (TSX:RY)
RY has lost about five per cent this year and 6.5 per cent this month. Priced at C$127.73 at market close Monday, RY is probably only one or two per cent above being undervalued.
Its price-to-earnings (P/E) ratio of 11.5 denotes the amount of dollars to be invested to net one dollar of profit.
With a quarterly dividend C$1.20, RY’s current dividend yield is 3.76 per cent.
Toronto-Dominion Bank (TSX:TD)
TD closed at C$92.49 Monday and has lost 4.6 per cent YTD. In the last month, it has lost 4.4 per cent.
The stock’s P/E ratio is comparable to that of RY and is 11.6. It has a dividend yield of 3.85 per cent and pays a quarterly dividend of C$0.89.
Also read: SGML, WED, DE, NFG & QRC: 5 TSXV small cap stocks for new investors
Bank of Nova Scotia (TSX:BNS)
BNS has lost a little more than the above two this year, down 9.1 per cent. Over seven per cent of that has come in the last month.
It closed at C$81.40 on Monday and its P/E ratio stood at 10.1. BNS seems less than one per cent away from being undervalued.
Its dividend yield was at 4.9 per cent with a quarterly dividend of C$1. It has the best dividend yield on this list.
Dividend yield is the stock’s dividend payments relative to its price.
Bank of Montreal (TSX:BMO)
At market close Monday, BMO stood at C$132.49. In total, for 2022, it is down 2.7 per cent but it has slumped 8.6 per cent in the last 30 days.
The stock at this price may be undervalued. Its current P/E ratio is 10.2.
BMO pays a quarterly dividend of C$1.33 and a dividend yield of over four per cent.
Also read: BLU, VMD, FRX, CPH & TH: 5 TSX healthcare stocks beating the odds
Canadian Imperial Bank Of Commerce (TSX:CM)
CM ended the trading day Monday at C$139.31. The stock’s YTD loss is 5.5 per cent compared to its one-month loss of 5.1 per cent.
The stock might be in undervalued territory by more than one per cent. It has P/E ratio of 9.6 which is the least and so the most desirable in this list.
It has a quarterly dividend of C$1.61 and its dividend yield is 4.62 per cent.
Also read: FFN, DF, DGS, LCS & FTN: 5 top TSX dividend stocks under $10
Bottom line
As the graphic above points out, the last month accounts for most of the losses seen by these stocks YTD and so they may be said to be on the dip.
A majority of them are likely on the brink of or already in undervalued territory. Some of these stocks might gain with possible future interest rate hikes.
The S&P/TSX Capped Financial Index is in the red by 7.3 per cent and by that comparison, these stocks have done better. These stocks are generally more stable compared to mid cap or small cap stocks given their big market caps.
Also read: How does current inflation compare to 1970s stagflation?
Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
