Thursday, December 17, 2009

Toronto Dominion Bank 2

Today, I want to finish my review of this stock (TSX-TD). I first bought this bank in 2000 and I bought some more this year. The price of this stock was too good this year to pass up. On this stock, I have made a return of 13% per year. I should point out that on the stock I bought in 2000; I have made a return of 8.8% per year. On the stock I bought this year, I have made a return of just over 25% per year.

The first thing to discuss is Insider Buying and Insider Selling. On this stock, there is mainly just Insider Selling. Insider Selling is at 130M for the past year. The net Insider Selling is at 129.1M. As you can see, there is not much buying. This, together with the lack of a dividend increase, and you got to feel that insiders do not much faith in TD. This is a huge negative against buying any of TD’s stock.

Now, lets move on to the Ratios. First, I will talk about the P/E ratios. For this stock, the P/Es based on last 12 months earnings are higher than mine based on expected earnings. This is because this bank is expected to earn more in 2010 than it did in 2009. I get a P/E of 12. The 5 year average low is 11 and the 5 year average high is 15.5. This puts the P/E close to the low. The next item is the dividend yield. The current yield is 3.7% and the 5 year average is 3.4%. This means that the current price is relatively good.

The last ratio to look at is the Price/Book Value ratio. This current ratio at 1.37 is just 70% of the 10 year average. This shows a very good relative price. A good price is when the current Ratio is 80% or less of the 10 year average. The next thing to talk about is the Graham Price. Currently the Graham Price is $59.33, which is 8% lower than the current stock price of $64.23. The expected Graham Price for 2010 is $74.36 and this is almost 14% higher than the current stock price. The Graham Price for 2008 was $65.45 and this is higher than the current stock price. All this would point to a good current stock price.

Globe Investor site gives this bank a 4 star rating. When I look at the recommendations for this stock, I see calls that cover the full range from Strong Buy, Buy, Hold, Underperform and Sell. However, the dominate recommendations are Strong Buy, Buy and Hold. There is very few of the other two. The consensus recommendation would be a buy. (See my site for information on analyst ratings.) You can see from all this there is a very wide range of opinion on this stock.

Our banks certainly have current problems. However, if you believe that TD will get back on track, make money and start increasing their dividends again, then you should be looking at an opportune time to buy the stock. The best time to get the lowest price is when there are problems are others are selling. I have long term faith in this bank and so, I will hold what I own for now. I will sell only when this stock becomes too much of my portfolio, or I find a bank I like better.

TD is a bank with a full range of financial products and services for individuals and corporations in Canada, USA and internationally. Financial products and services include Canadian Personal and Commercial Banking; Wealth Management; U.S. Personal and Commercial Banking; and Wholesale banking products. Its web site is See my spreadsheet at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at

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