Is the Bank of Nova Scotia the best bank stock to buy for future growth?
The Bank of Nova Scotia soared from $ 54 per share in late October to nearly its current price of $ 77. A strong backlash arose after investors realized that the bank’s business was holding up better than expected in the early days of the pandemic.
The Bank of Nova Scotia reported that revenue in the first quarter of 2021 was slightly higher than in the same quarter last year. Adjusted net income was $ 2.4 billion, an increase of 3% compared to the first quarter of 2020.
Return on equity (ROE) improved from 13.9% to 14.4%. Banks closed the quarter with a CET1 ratio of 12.2%.
Canada’s bank-adjusted net income increased 1% to $ 915 million. Global wealth management revenue increased 34% to $ 425 million. Capital markets group net income increased 20% to $ 543 million. Finally, international banking net income fell 32% to $ 398 million.
As the global economy moves into recovery mode, the Bank of Nova Scotia’s international group may outperform in the coming years. The business is mainly located in Mexico, Peru, Chile and Colombia. The pandemic has hit the Pacific Alliance hard, but there has been a strong backlash in an unprecedented global stimulus package.
Base metal and oil markets affect the economies of these four countries. Oil prices have risen sharply since November. WTI Oil is currently trading at close to $ 60 a barrel, and analysts predict it could reach $ 75 this year. This is good news for Mexico and Colombia.
Copper prices have recently hit a nine-year high. Metals are an important component in the manufacture of electric vehicles, solar panels and wind turbines.A strong copper market Peru and Chile..
As the middle class expands in four Latin American countries, Bank of Nova Scotia should benefit from rising demand for loans and investment products.
Currently, the price-earnings ratio is a multiple of 14.5, offering 4.7%. dividend Yield.
Are CIBC stocks still cheap?
CIBC’s share price rose from $ 97 per share in late October to nearly $ 121 today. During the worst crash, stock prices fell below $ 70 last March. CIBC is widely regarded as the most exposed to the Canadian housing market. Canada Mortgage and Housing Corporation (CMHC)’s initial forecast of a 9-18% drop in home prices didn’t work. In fact, record low mortgage rates that emerged as a result of the pandemic have boosted home prices.
Housing strength appears to continue while mortgage rates remain low. This is a good sign for CIBC.
Banks reported adjusted net income for the first quarter of 2021 of $ 1.64 billion, an increase of 11% from the first quarter of 2020. Adjusted ROE increased by 110 basis points to 17.2%. CIBC closed the quarter with a CET1 ratio of 12.3%, ending most mortgage postponements and the housing market remains strong, possibly holding far more capital than is currently needed there is.
Individual and Business Banking Group reported that first-quarter net income increased 13% to $ 652 million. CIBC’s Canadian commercial banking and wealth management operations saw net income increase 5% to $ 354 million. The bank’s US commercial bank and wealth management group enjoyed a 12% net profit increase of $ 155 million. Capital market net income surged 30% in the quarter to $ 439 million.
Overall, CIBC has made a strong start towards 2021.
The stock trades at 13.2 times the return and offers a dividend yield of 4.8% at the current price.
Is Bank of Nova Scotia or CIBC a better buy today?
Both Bank of Nova Scotia and CIBC are great companies that pay attractive dividends that continue to grow. CIBC currently offers better yields and trades in cheaper multiples. If you think the housing market is clearly outside the forest, CIBC may buy it.
Other than that, the Bank of Nova Scotia appears to be suitable for long-term growth opportunities in international business.
I will probably split the new investment between the two banks today.
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Motley Fool recommends BANK OF NOVASCOTIA. A stupid contributor, Andrew Walker, has no position in any of the shares mentioned.
Do I need to include the Bank of Nova Scotia or CIBC Stock in my purchase list?
https://www.fool.ca/2021/03/04/should-bank-of-nova-scotia-or-cibc-stock-be-on-your-buy-list/ Do I need to include the Bank of Nova Scotia or CIBC Stock in my purchase list?