Are you considering investing in CIBC stocks? Is it a good time to buy stocks from the Canadian Imperial Bank of Commerce (CIBC)?
Ask any Canadian investor about building a beginner portfolio. Most recommend various stock options. The most common recommendation you’ll receive is Canadian bank stocks (see also the best long-term Canadian stocks).
Banking stocks have to yield solid dividends and bounce back more than other types of stock. This happened after significant market crashes like:
- The 2007-08 global financial crisis and,
- More recently, last year’s covid19 pandemic.
To Buy or Not to Buy: CIBC Stocks
CIBC is the fifth-largest bank in Canada. It serves over 11 million customers within its three business segments:
(1) retail and business banking,
(2) capital markets, and
(3) wealth management.
Whether the bank is a good banking stock or not, it should be the focus of anyone’s question. That is whether it is the right time or not.
Some investors preyed on the pandemic market crash last year. They bought extensive Canadian bank stocks like CIBC stocks. It is the oldest trick of the stock investment book: “buy low, sell high.” The banking stocks were on sale at basement prices in 2020. Those investors are most likely enjoying price gains in 2021.
Is it too late to buy CIBC stocks now? Or is it still considered a win-win a year and a half after the pandemic crash?
Cibc Analyst Recommendations & Stock Picks
CIBC offers investment products such as exchange-traded funds (ETFs), mutual funds, and managed accounts. They are available through retail brokerage firms. The firms include TD Waterhouse or RBC Direct Investing. CIBC’s stock price has increased by at least 50% during the past year.
The recent rise in interest rates may affect future profitability. Higher borrowing costs will increase operating expenses for banks. That could lead to lower loan demand. Also, competition within the industry continues to grow. CIBC shares will continue to outperform other stocks in the sector. This is due to better risk-reward characteristics than most competitors. Our target price represents an attractive valuation based on:
- our expectations for continued earnings growth and
- solid dividend yield
Get guidance from expert analysts. You will get access to proprietary databases full of quantitative data – all free!
Choosing Between the Canadian Imperial Bank of Commerce Stocks and Competing Bank Stocks
In this section, we discuss how investors choose their investment strategy. Some chose based on fear while others greed. Next, we’ll look at investor psychology and see if value or momentum works better for you. We’ll also examine risk profile and volatility before looking at valuation metrics. Lastly, if you want to avoid doing research on your own, Robo advisors, which made investing online so popular these days, use algorithms to invest on your behalf.
When making any investment decision, there’s always a tradeoff between concentration and diversification. Decide whether to invest in one stock or many. Most investors focus on the potential upside or the downside. Yet, both have advantages and disadvantages. Let’s take a closer look at them.
When considering single security, you’re usually trying to maximize returns while minimizing risks. But what happens if the stock falls back down to earth? Your losses could exceed your gains. This is why some people prefer to spread out their money across many stocks. The idea behind concentrating your portfolio is that if one stock goes up, others are likely to go up too. So even though you may lose money, you won’t lose as much as someone who invested in one stock.
Spreading yourself can lead to lower returns than focusing on fewer larger positions. That’s because each position requires more research and analysis. Take extra effort to learn about every company you own. That gives you a chance to avoid mistakes like those made by Berkshire Hathaway. Besides, you should have a diverse set of holdings. That means you don’t need to worry so much about which companies are going to perform well over the long term. You can concentrate on finding good businesses with solid fundamentals (see the Canadian stocks to buy now), or the ones for the future – like 5g stocks. That is regardless of the industry sector state.
The key takeaway here is that diversifying isn’t always best. It depends on your goals and preferences. Some people find it easier to manage risk through diversification. But, they also enjoy the benefits associated with owning only one large holding. Sooner or later, the choice comes down to personal preference.
While diversification has obvious upsides, it does come with drawbacks. One major drawback is that it makes it harder to identify undervalued securities. Since you aren’t buying shares from dozens of different companies. You might miss out on the opportunity to buy low-priced assets. Another problem arises when you try to sell off part of your portfolio. Selling an entire basket of stocks can be challenging. That is because investors often feel attached to specific investments. They’ll hold onto these for emotional reasons rather than financial ones. Finally, diversification doesn’t guarantee higher returns. Even if you end up losing money, you still stand to make more than someone investing in one asset class.
Individual Bank History
Over the past decade, CIB has been on quite a run by underperformance both in the market and itself. But, recently, CIB has outperformed most major markets around the world. The firm has put plans to cut costs by reducing:
- closing branches,
- cutting back on marketing expenses, and
- selling certain divisions
Many stock firms struggle when times get tough. But CIB has continued to make profits despite revenues decline in recent quarters. That makes it worth it for you to invest in CIB today.
The Canadian Imperial Bank of Commerce has a strong balance sheet. It trades at an attractive valuation. But the stock could be volatile in the short term due to its exposure to Canada’s housing market. The bank provides investors access to:
- early-stage investment opportunities and education,
- inspiration, and
- community within a global network of sites
Its mission is to help investors achieve their personal finance goals. They manage this by providing timely and relevant content across many investing platforms.
Earning Power, Income, and Risks
CIBC has over $1 trillion worth of assets under management. It operates more than 1,000 branches across Canada. The Canadian Imperial Bank of Commerce trades its stocks under the symbol “CIB.” The symbol is on all stock exchanges around the world.
The Canadian Imperial Bank of Commerce is among the top ten global institutions. That’s because of its total assets, deposits, loans, branches, employees, and market capitalization.
CIBC’s main business income-earning activities include:
- investment management,
- insurance brokerage services,
- trust administration,
- credit card processing,
- wealth management,
- mortgage lending,
- commercial real estate development,
- private equity investments,
- asset management, and
- corporate finance
Are you’re looking for a solid dividend-paying stock with good growth prospects? Look no further than CIB. The firm pays investors one of the highest yields among banks. Because of its high-quality earnings, the company is growing over time. The firm remains rated with an excellent track record.
Where to Learn More About the Stock Market and Investing
What Is the Stock Market Cycle?
The stock market cycle has been a topic of interest for many years. There are three phases to every stock market cycle;
- an expansion phase,
- a contraction phase, and
- a recovery or consolidation phase
This theory has stood the test of time. That is why we have had so many different economic cycles over the past 100+ years. The current recession or depression started with the bursting of the housing bubble. That led to the collapse of the financial system.
Why Sell Canadian Bank Stocks Now?
Several factors led to recent market volatility. This includes the United States Federal Reserve’s decision to increase its interest rates. These are some of the reasons why investors need to consider selling their holdings. They can trade in Canada-based banks and other financial institutions now.
Large institutional investors such as:
- mutual funds and
- hedge funds have sold off shares in specific sectors of the stock markets
The institutions believe that an economic downturn may occur soon. They also expect that central bankers will begin raising interest rates than anticipated.
There are concerns about rising inflationary pressures. This is another reason why investors might want to reduce exposure to bank stocks. That is because of the potential impact on corporate earnings growth. That is, if the economy weakens further.
Banking and Investment Terms to Help
Like any stock, banking stocks can seem intimidating to analyze at first. Growing your portfolio could be easier. That is once you are familiar with the terms, such as:
- Ticker symbol:
- 52-week high:
- High and low:
Apps and Tools for Banking Stock Management
There is a collection of apps, tools, and websites that are useful in stock management. Some are free, while others cost money, but they all help me manage the stocks better than before. Here are some of them:
- Google Finance
- Yahoo! Finance
- Business Insider
- WSJ Live Charts
- Wall Street Journal Online
- Reuters News
The Bottom Line
The Canadian Imperial Bank of Commerce is amongst the largest banks in Canada. CIBC has been around since May 15, 1867. William McMaster founded it in Toronto as a competition for the Bank of Montreal, Canada.
Today, there are more than 1,100 branches across Canada. CIBC bank is the largest of the major banks in Canada and North America. That is according to Bloomberg Markets magazine. It’s also worth noting that CIBC offers its customers an online account. Online accounts allow investors to manage their finances anywhere they have internet access. This makes it quick to keep track of all transactions and balances. Investors do not have to visit any physical locations.