TD Bank named “Top Pick” by this fund manager

Some investors are sizing up Canada’s banks, wondering if the lower interest rate environment means its time to pull the trigger. Fund manager Chris Blumas of Raymond James Investment Counsel has a somewhat surprising pick in TD Bank (TD Bank Stock Quote, Chart, News, Analysts, Financials TSX:TD).

“(TD is) trading at the lowest P/E multiple of the peer group,” Blumas notes , adding that there has been a definable trend in the sector, from a return perspective. “If you look at the Canadian banks in general, the biggest underperformer is the next outperformer,” he said.

Blumas says he likes TD not for its potential for share price growth, but its robust dividend.

In October, TD was ordered to pay $3.09-billion after it pled guilty to money laundering and conspiracy to violate the Bank Secrecy Act.

“By making its services convenient for criminals, it became one,” U.S. Attorney General Merrick Garland said. “Today, TD Bank became the largest bank in U.S. history to plead guilty to Bank Secrecy Act program failures, and the first bank in history to plead guilty to conspiracy to commit money laundering.”

Blumas speculates that perhaps part of the reason for the stock falling is that no one wants to be seen as owning it after such as scandal. But he says the result is simply a cheap stock with many attractive elements.

“It’s still a great domestic franchise, they are going to figure it out in the U.S., whether if they stay or they go. But it’s a very, very low price multiple and a very protected dividend with a great capital position,” he added.