The S&P/TSX Composite Index rose 127 points on April 26. Canadian stocks have rebounded nicely in late April after a difficult February and March. Investors have responded positively to progress in NAFTA talks, and Canada has posted positive economic news since GDP shrank in January.
Even in the midst of this recent rally, the TSX still stands at an attractive value. With bank earnings looming, and the economy gaining steam, let’s look at three stocks to stash as we move into the month of May.
Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM)
CIBC stock has climbed 1.3% week over week as of close on April 26. However, as of this close shares were still down 8.6% in 2018 so far. There is good reason to be optimistic ahead of the next round of bank earnings, and CIBC offers a tasty dividend.
CIBC is set to release its second-quarter results for fiscal 2018 in late May. In the first quarter, CIBC reported adjusted net income of $1.43 billion compared to $1.16 billion in Q1 2017. The bank reported an $88 million charge from net tax adjustments resulting from the U.S. Tax Cuts and Jobs Act. Net income in U.S. Commercial Banking and Wealth Management surged 362% year over year to $134 million.
The bank also hiked its quarterly dividend to $1.33 per share, representing a 4.6% dividend yield. The stock comes at a bargain after a steep fall in February and March, and earnings should see a boost as the reduced tax rate south of the border will kick in from here on out.
Genworth MI Canada Inc. (TSX:MIC)
Genworth MI Canada is an Oakville-based private residential mortgage insurer. Canadian housing has struggled in 2018, suffering under the weight of rising rates and new regulations. CMHC said recently that the Canadian housing market remains “highly vulnerable,” especially in major metropolitan areas like Vancouver and Toronto.
New OSFI mortgage rules that apply a stress test for uninsured buyers are a non-factor for Genworth. Shares of Genworth have dropped 6.1% in 2018 as of close on April 26, but the stock has still jumped over 20% year over year. In 2017 Genworth saw premiums earned rise 6% to $676 million, and net income increased 27% to $528 million. Genworth is set to release its 2018 first-quarter results on May 1.
The stock also offers an attractive quarterly dividend of $0.47 per share, representing a 4.4% dividend yield.
National Bank of Canada (TSX:NA)
National Bank stock increased 2.7% week over week as of close on April 26. As with other Canadian bank stocks, National Bank entered negative territory in 2018 due to a choppy February and March. The bank is expected to release its second-quarter results in late May.
In the first quarter, National Bank reported double-digit growth in each of its major business segments. Adjusted net income rose 11% to $556 million, and revenues hit $1.8 billion, also an 11% increase year over year. The bank offers a quarterly dividend of $0.60 per share, representing a 3.8% dividend yield.
