Toronto-Dominion Bank (NYSE:TD) — With roughly $869 billion in assets, this is the largest bank holding company in Canada.
TD stock was upgraded by Citi Research on Tuesday to “buy” from “neutral “based in part on its significant share repurchase program. The bank has also restructured its balance sheet and expanded its influence in the United States.
A major headwind for the firm is the roughly 13% decline in the Canadian dollar versus the U.S. dollar in the past 12 months. Therefore, TD stock stands to benefit from three fundamental catalysts: improving bank earnings, rising oil prices and a strengthening Canadian dollar, which is closely related to the price of Canadian crude oil.
S&P Capital IQ estimates the bank’s revenues will rise 4.5% in fiscal 2015 (ended in October) on a 6.9% increase in net interest income and an 11% increase in interest-earnings assets. Its analysts estimate earnings of $3.61 in fiscal 2015 and $3.70 in fiscal 2016.
They have a “buy” rating on TD stock and a 12-month target of $47, which is just 13.1 times their estimated earnings for the next four quarters
TD stock fell from a high of $53.49 in August to a low under $40 on Jan. 30. However, since mid-February, it has been accumulating buyers.
Technically, TD stock is in a sideways trend characterized by three buy signals from my proprietary indicator, the Collins-Bollinger Reversal (CBR), the break of its 50-day moving average, and a pop through its intermediate trendline.
On Tuesday, despite a broad market sell-off, it issued the third of the CBR buys and rallied 1.8%.
Buy TD stock at the market for a three-month trade to $50 for a 17% return. Investors should purchase shares as a long-term holding in the Canadian banking industry.
