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Opinions The Monthly Gems by Allan Tong
Bank of MontrealBMO.TOTOP PICKApr 03, 2023
Stock price when the opinion was issued
As of Jun 19, 2026. Market Open.
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BMO really has the US going well. As the smaller of the big 5 banks, it's really been accelerating its growth. He's long in his value momentum fund.
Brendan CaldwellQ4 a bit shy, due to some charges. Otherwise in line. The one to buy. Better growth rate due to Bank of the West synergies. Still fairly valued around 9x, with around 5% growth. Wait for a pullback, and then sell puts to get in at a lower strike price and get some dividends. Fine over next 5-10 years; not if it will work, but when.
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Premium contentAlways a solid quality company, it is trading at 1.1x book and 11x earnings with net margins of 22%. We like that cash reserves are growing, while debt is aggressively retired. We recommend placing a stop-loss at $94, looking to achieve $126 -- upside potential of 15% and a good dividend as well. Yield 5.2%
(Analysts’ price target is $126.03)Premium contentOur PAST TOP PICK with BMO has triggered its stop at $112. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 5%, when combined with previous recommendations.
After recent merger, now one of the top 10 banks in the US, operating in 32 states. Merger will bring cost savings. Strong suit is commercial banking and lending. Large Canadian wealth management, good-sized NA capital markets, plus a smaller insurance business. 13% ROE plus 7% growth rate in dividends, resulting in a double-digit return over the coming cycle. Yield is 5.17%.
(Analysts’ price target is $127.24)
Brian MaddenCanadian banks are reasonably priced, but still headwinds on loan losses. He likes the one with the best balance sheet, TD. He also likes CM, with its outsized dividend yield and low valuation. BMO is OK.
For the heavy lifting in your portfolio, he'd look instead at insurance companies with similar yields and more growth over the next 1-2 years.
Canadian banks are one of the strongest oligopolies in the world. Raising dividend shows the results miss is not a long-term problem. Digestion issues on latest acquisition. Raising loan losses to normal levels. Expenses were higher. Inflation has increased wages. Keep holding, comfortable buying more.
Decline reflects decline in the sector. Large cap, very stable. US regional bank issues shouldn't affect its operations. Bigger institutions have benefited from banking turmoil. Diversified. Likes Canadian banking as a whole. Sound investment. See her Top Picks.
Christine PoolePremium contentWe reiterate BMO as a TOP PICK. Trading at 9x earnings and only 1.2x book it is good value here. A recent acquisition of California based Bank of the West will well position it for growth as the US economy rebounds. We note that shares were issued to reduce debt levels. We recommend continuing to maintain a tight stop at $112, looking to achieve $141 -- upside potential of 20%. Yield 4.6%
(Analysts’ price target is $141.41)Premium content
Premium contentOwing Canadian chartered banks during periods of market uncertainty is always a good strategy. It currently trades at 1.5x book and under 10x earnings. Cash reserves are growing as the company retires debt. We recommend placing a stop-loss at $100, looking to achieve $143.50 — upside potential over 20%. Yield 4.6%
(Analysts’ price target is $143.45)
Unless another bank melts down, financials will continue to recover. The contagion spread to Big Six in Canada with stocks like TD getting beaten down. With the greatest exposure to the U.S., TD is one to buy (already recommended by Stockchase), but BMO is another that will bounce back. Stockchaser Michael O'Reilly picks it for its consistent and attractive numbers: 5.9x PE, 1.18x price-to-book, and a 4.79% dividend yield. To compare, Royal Bank trades at 12.27x and pays 4.11%. Thanks to the banking crisis, BMO shares sank 6.9% in March, but in the the last week have recovered 2%. Expect this trend to continue.