No. of Recommendations: 5
Maybe so, but a major risk factor that is worth considering is that Canada's economy may be in for a world of hurt, with the Trump tariffs. Canadian real estate is among the most expensive markets in the world, despite Canada's sluggish economy, and seems due for a correction. If the tariffs throw Canada into a recession, which they may well do, then RE prices have room to drop dramatically. In that case, TD would take very heavy losses, as most of its activities are in Canada.
The other thing to consider is that their share price has actually not gotten hammered - it is actually up 3% from the C$80 it was at a year ago, which represents 17 times earnings. In US dollars, it is down about 3%, but that is just because the Canadian dollar has dropped about 6% from a year ago.
All good points, some counter-counter arguments.
Canada Housing
* Bank Exposure seems to be fairly well managed; for example when interest rates were rising they were allowed to adjust the repayment terms for their customers.
Canada Economy
* Certainly a headwinds, could be a challenge; note that tariff threat is just a threat right now
Share Price
* Historically all the Bank stocks in Canada tend to trade in a range of each other. Royal Bank and TD being the typical leaders. In the past year RY is up 30% CIBC is up 50%, TD is flat, and dropped from $87 CAD to $73 CAD - a 15% drop. Looking even longer term
5YR
RY +65%
TD +10%
tecmo
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