Monday, December 25, 2017

Canadian Western Bank Has Restored Itself As A Growth Bank

From the summer of 2014 through the summer of 2017, Canadian Western Bank (OTCPK:CBWBF) (CWB.TO) endured an ugly downturn brought about by the sharp decline in oil prices and the resulting impact (real and perceived) on the economy of Western Canada. Although this downturn did knock Canadian Western back a bit, it didn’t appear to do any lasting damage. More importantly, management stuck to its long-term plans throughout the downturn, plans that included expanding its equipment leasing operations, its mortgage operations, and its business mix outside of Alberta.

With the shares having doubled of the February 2016 low, risen more than 50% from my last write-up, and risen more than 20% over the past year, this isn’t an undiscovered turnaround story. Instead, it’s back to being a growth story, with management targeting strong lending growth in the coming years and progress towards mid-teens ROEs offering double-digit earnings growth potential. As the share price largely reflects those growth prospects, I’d call this more of a hold (or a watch list candidate), but it’s a name I’d keep an eye on for occasional pullbacks.

I would also recommend that investors considering an investment in Canadian Western strongly consider the Toronto-listed shares (CWB.TO). While the ADRs do trade, the liquidity is unattractively low (whereas the Toronto-listed shares trade over 300K per day).

Read the full article here:
Canadian Western Bank Has Restored Itself As A Growth Bank

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