CA - National Bank of Canada: Buy For Its Growth And Keep For Its Safety

2024-05-24 12:22:58 ET

Summary

• The National Bank of Canada has shown strong growth and profitability compared to its Canadian banking counterparts and has been outperforming its competition.
• The bank has a strong safety profile with sufficient allowance for bad loans and low levels of non-performing loans.
• Recent earnings have again underscored the bank's disciplined approach to growth and safety in its RESL portfolio.
• The stock is fairly valued and has the potential for continued outperformance. I rate it as a Strong Buy.

Pitfalls of the Banking Industry

Investing in a banking stock is generally not the most exciting thing one can do in the world of the stock market. Banking history spans hundreds of years, and their business practices have remained largely unchanged. Despite introducing new products and putting new twists on existing ones, the core business model remains the same: collect deposits, lend money, and generate income from the interest rate spread....

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