The Globe and Mail reports in its Thursday edition that Canada's big banks posted financial results that beat Street expectations. The Globe's guest columnist Sean Pugliese writes in the Number Cruncher column that if interest rates climb, they are often a tailwind for financial firms.
As a result, Mr. Pugliese says, that along with his associate Allan Meyer, they thought to look at Canadian financials using their investment philosophy focused on safety and value. Mr. Pugliese says it is a sector that usually meshes well with their approach. Their picks had to have a market capitalization greater the $500-billion, which they say is a safety factor, because generally larger companies are more liquid and stable. They looked for safety and stability in dividends. Then they looked at debt-to-equity as their final safety metric. It is the total debt outstanding divided by shareholder equity. A smaller number is preferred and indicative of lower leverage or debt. The looked at return on equity, with a higher number preferred. Their recommended financial stocks are Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Brookfield Asset Management, Bank of Montreal and Canadian Imperial Bank of Commerce.
© 2021 Canjex Publishing Ltd. All rights reserved.