…As the Canadian economy is showing more and more strength, in addition to the very likely upcoming Bank of Canada’s rate hikes, it makes sense to explore Canadian banks and their possible performance in 2018 and beyond.
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1. RBC Royal Bank (RY)
RY is the sector leader in Canadian banking. RBC
- is Canada’s largest bank.
- ranks in the top 15 banks globally based on market cap.
- operates in…37 countries.
- is our top choice for its solid financials and how the Bank is keen on being an innovator and staying on top of the new technological trends. Obviously, it takes larger institutions and companies in general longer to upgrade and adopt new tech however, RBC seems to be leading the pack.
When assessing banks in general, their ability to innovate or at least stay up to date with current Fintech leaps is very important. Financial institutions are now facing the threat of new comers with disruptive tech “stealing” market shares. A good example is how the Blockchain technology can change the way banking and cross border payments are carried. That’s why it’s important to pick carefully and invest in the best.
RBC’s stock chart looks bullish. A solid uptrend with consolidation periods. This is what investors want to see because it shows strength. Note how the price broke out above 97.50 and came back for a successful back test. That level holding means there is more upside ahead for RY.TO stock price.
2. TD Bank (TD)
For investors looking for exposure to the Canadian and US market, TD Bank is a top choice. TD
- recently posted solid quarterly results, up 11% compared to last year. They also increased the dividend payout by 11%.
- is as solid as RBC showing a solid uptrend with consolidation periods.
The price broke out above 70 CAD and successfully back tested the breakout level which means more potential for upside for TD.TO stock price.
3. Bank of Nova Scotia (BNS)
The Bank of Nova Scotia is the Bank we believe will strongly perform on the longer term. It’s exposure to international and emerging markets will very likely pay off well but investors will need to be patient with this one for stronger gains. BNS
- posted solid earnings with increases both nationally and internationally,
- increased their dividend by 3% and the net income attributable to shareholders for this period compared to last year is up by 12% but we think the best is yet to come for BNS.TO as we see the return on investment pick up in emerging markets.
The BNS price chart is bullish as well and shows a breakout pattern. The backtest did drop below the breakout level of 79 which is likely to become a short term resistance, however, this resistance will eventually be overcome.
Related Article From the munKNEE Vault:
The banking system in Canada is concentrated in the Big 5 banks, which account for more than 80% of total banking assets. To help investors choose the best near-term growth prospects amongst the Big 5 banks, we analyze the three key financial metrics: Revenue Growth, EPS Growth, and Return on Equity.