Should You Load Up on TD Bank Stock?

should you load up on td bank stock?

analyze data

Shares of TD Bank (TSX:TD) were dealt quite the heavy hit to the chin to start May, as most other banks inched higher under their own footing. Undoubtedly, investors were quite wary about the potential for money-laundering scandal penalties to add up. TD Bank set aside a chunk of cash to prepare for penalties, but some analysts out there think a worst-case scenario could weigh on growth for many years to come. They’re not wrong.

Indeed, TD Bank’s U.S. retail banking business was seen as a source of meaningful growth for the Canadian bank. Should restrictions be put in place that limit growth south of the border, it’s unclear how earnings will fare over the next five years. Perhaps TD will lose its growth lustre as peers gain relative ground.

In my opinion, the worst has already worked its way into the stock when it fell below $75 per share just a few weeks ago. Since nosediving to that level, TD Bank stock has been on the mend, now up more than 4% to around $78 per share.

After TD pays its penalties and fixes all anti-money laundering (AML) shortcomings, I think TD Bank will be right as rain again. Perhaps by then, the Canadian and U.S. economies are ready to pick up traction again as well. Of late, other Big Six Canadian banks have healed a great deal in recent months, recovering ground lost from prior declines.

With more room to gain and potential unique catalysts (think succession plans that could entail the announcement of a new chief executive officer, or CEO), I view TD Bank stock as offering a great bang for one’s buck. The dividend yield is juicy at 5.27%, and the 12.3 times trailing price-to-earnings (P/E) multiple fails to consider the bank’s long track record of navigating through all sorts of different environments.

TD Bank: Still a premier bank?

TD Bank is great at balancing risk and reward. Not much has changed on that front. As the bank bets on generative AI to save costs while bolstering AML capabilities, TD Bank may finally regain its growth edge over rivals.

Undoubtedly, in the face of uncertainty, the bank needs not only a commitment to change but a fresh face in the CEO’s office if it’s going to put the money laundering scandal behind it.

Of course, given ongoing regulatory investigations, it will be somewhat harder to court a seasoned candidate to get into that corner office over at TD. And there may be a limited applicant pool at this juncture. Perhaps once Bharat Masrani has had a chance to clean up more of the mess, a successor will be more likely to hop aboard.

The Foolish bottom line

TD Bank stock looks like a solid buy while it’s discounted relative to its banking rivals. The heavy hit of money-laundering woes will linger for quite a while. But it’s a fixable issue, and for those with five years or more to wait, perhaps TD stock is the best value bet in the banking waters right now. The stock is already bouncing back from the early May drop. Now that shares are showing signs of life, I’m more comfortable jumping in today than back then.

Perhaps future catalysts (e.g., a CEO change) and the incorporation of generative artificial intelligence could help TD Bank emerge from these ominous depths. Although not my favourite Canadian bank stock to buy right now, TD stock is in my top three for June 2024.

Should you invest $1,000 in TD Bank right now?

Before you buy stock in TD Bank, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the 10 best stocks for investors to buy now… and TD Bank wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $18,271.97!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 32 percentage points since 2013*.

See the 10 stocks * Returns as of 5/21/24

More reading

    Fool contributor Joey Frenette has positions in Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

    OTHER NEWS

    32 minutes ago

    German's Can switched Spanish holiday for Euro 2024 and opening-match goal

    32 minutes ago

    Turkey aim to bounce back from Euro flop against debutants Georgia

    32 minutes ago

    Ronaldo faces Schick in battle of top marksmen from last Euros

    32 minutes ago

    Buksa to lead Polish attack in place of Lewandowski against Dutch

    32 minutes ago

    Online misogynistic content and harmful algorithms drive new anti-domestic violence push

    32 minutes ago

    Winter Storm Maps Show Where State Could Be Hit With 7 Inches of Snow

    32 minutes ago

    Tito Mboweni throws shade at Zuma: ‘Why did you do this?”

    32 minutes ago

    Watch as the man who taught Michael Jackson the Moonwalk does it live in London

    32 minutes ago

    The anti-Ulez vote helped Tories win in Uxbridge but has pro-car agenda run out of road?

    35 minutes ago

    Toxic garlic should have prompted EPA to warn against gardening near Ohio derailment, watchdog says

    37 minutes ago

    Euros 2024: German Police Shoot Man Wielding Axe Near Zone For Dutch Football Fans In Hamburg

    37 minutes ago

    As Kate Middleton gets back behind the camera, how the Princess' passion for taking pictures has seen her capture some of the most touching royal photos in decades

    37 minutes ago

    Kate Middleton's children Prince George, Princess Charlotte and Prince Louis share their first message to the family's social media accounts as they wish 'Papa' Prince William a 'Happy Father's Day'

    37 minutes ago

    Taylor Swift leaves tennis star Iga Swiatek in tears after giving French Open champion a hand-written note as she watched an Eras Tour show

    37 minutes ago

    Alpine’s F1 misfortunes carry over to Le Mans with early race catastrophes

    38 minutes ago

    Greens justify £350bn spending plan

    38 minutes ago

    George, Charlotte and Louis issue first ever royal statement with new Father's Day photo

    38 minutes ago

    Weather partly cloudy

    38 minutes ago

    Aston Villa transfer news: Why heroic Tammy Abraham return has no downside

    38 minutes ago

    Lakers News: Jerry West’s Legacy Honored by Former Lakers Champion in Emotional Tribute

    39 minutes ago

    With rain on the way, Lake Houston being lowered by a foot

    39 minutes ago

    Video: Dramatic moment armed German police close in on axeman near Euro 2024 fan zone in Hamburg before shooting him after he made firebomb threat just hours before Netherlands clash with Poland

    41 minutes ago

    Experts warn gardeners DON'T install artificial 'fake' grass this summer - here's why

    41 minutes ago

    Dramatic moment armed German police close in on axeman near Euro 2024 fan zone in Hamburg before shooting him after he made firebomb threat just hours before Netherlands clash with Poland

    42 minutes ago

    Peter Dutton’s plan to ditch 2030 emissions target would drive up power bills, Penny Wong says

    43 minutes ago

    ‘I made millions for doing nothing!’: How rapper Vanilla Ice built a real estate and media empire — he's reportedly worth $20 million

    43 minutes ago

    Mavs knock on top-four door, extend Firebirds' misery

    43 minutes ago

    How to Debloat Windows 11 for Optimal Performance

    43 minutes ago

    Are Holland and Netherlands the same country? Here's why Virgil van Dijk's team are called by two names

    43 minutes ago

    Red Bull tipped to ‘walk it’ at Spanish GP under one key condition

    43 minutes ago

    Starting from scratch at 40? I’d use Warren Buffett’s golden rule to build wealth

    43 minutes ago

    Loving husband and father who was diagnosed with leukaemia in 1989 and infected with Hepatitis C through contaminated blood products was unable to recognise his own children after being 'abandoned'  by the UK's healthcare system

    43 minutes ago

    How David Beckham is swapping the bright lights of the A-list for idyllic country living - just like The Good Life's Tom and Barbara

    43 minutes ago

    Edinburgh studio flat with bunk bed in kitchen hits the market for an eye-watering £950 a month

    43 minutes ago

    Can YOU find the three broken suitcases within 30 seconds? Test your eagle eyes with this tricky brainteaser

    43 minutes ago

    Dave Cassin: Ultra-fit bodybuilder husband suddenly dies after celebrating anniversary

    43 minutes ago

    What England's axed Euro 2024 players are getting up to on their summers off from Marcus Rashford partying out in Cannes to Jack Grealish jetsetting off to Dubai

    43 minutes ago

    Two boats crash into each other and man thrown overboard as brutal gales plunge Isle of Wight annual yacht race into chaos

    43 minutes ago

    The 'David vs Goliath' court battles... where the little guy wins: How huge corporations like McDonalds, Vogue and Louis Vuitton dragged small businesses into legal battles in a bid to 'protect their brands' - but common sense prevailed!

    43 minutes ago

    Families' fury over 'awful' overgrown cemetery as grieving relatives are forced to cut grass and weeds themselves with scissors to access loved ones' graves