Canadian bank-lovers should look beyond our Southern border

U.S. regional banks boast a US $2 trillion market cap - larger than the entire Canadian equity market, according to Hamilton Capital

Ruth Saldanha 26 February, 2019 | 6:00PM

Canadian investors largely like banks, because of the stability of business, and the steady dividend income these stocks provide.

However, for investors who would like diversification beyond the big Canadian banking names, the U.S. market could provide a few ideas.

“To start 2018, we were largely bearish on the U.S. banks, as most names were trading at 2 or 3 stars and we felt valuations were too optimistic. That has now switched with many names trading at 4 stars, as prices have become more pessimistic. We continue to think U.S. banks are an interesting place to look given the sentiment currently baked into valuations”, says Morningstar equity analyst Eric Crompton, who points out that now he is more mixed on U.S. bank valuations as the markets have recovered.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
CenterState Bank Corp16.90 USD8.13
Fifth Third Bancorp20.97 USD9.28
IBERIABANK Corp C25.30 USD3.69
KeyCorp12.74 USD7.42
Pinnacle Financial Partners Inc43.00 USD5.37
SVB Financial Group221.38 USD6.10
Western Alliance Bancorp40.66 USD11.40

About Author

Ruth Saldanha

Ruth Saldanha  Ruth Saldanha is Senior Editor at Morningstar.ca

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