# Canadian Western Bank (TSE:CWB)



## gardner

The thread I find on CWB was on LB also, and went stale in 2011. Apologies if there is a thread I should have found.

CWB looks to be quite badly beaten up this morning. I've never held them because I consider their dividend yield too low, but as of this morning its in the 2.85% range. If they get down to $28 for a yield of 3% I would buy a bit. Anyone else watching these guys?

I assume folks are worried that CWB is too heavily tied to the oil biz and mortgages and such in the oil-patch. But they're a steady dividend payer and have increased steadily.


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## AltaRed

If they have large loan losses to cover in 2015/2016 (both residential mortgages and/or business/corporate loans due to oil patch malaise), they will not be able to increase their dividend for years and could in fact be 'forced' by the regulator to increase their capital with a very dilutive shareholder issue. Bank problems can be slow to show up and take a long time to rectify.


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## humble_pie

at one point i held a CWB preferred. Its dividend would surely be safer than the common. Have not looked into these recently but might be worth a look-see.

2 other legs to their banking business were vehicle buys & farm financing (somewhat related i imagine.) Would grain & cattle farms be badly impacted by lower energy prices? would they not benefit instead? the people-gotta-eat theory?


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## AltaRed

Agriculture is a pretty good sector right now and would be enhanced due to lower energy costs (energy being a substantial cost component of agriculture)


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## Barwelle

humble_pie said:


> Would grain & cattle farms be badly impacted by lower energy prices? would they not benefit instead? the people-gotta-eat theory?


Lower oil prices mean lower fuel costs for equipment and transportation, though fuel is not really a big expense in the big picture... lower fertilizer costs in the past couple of years, at least partially due to the fact that natural gas is used to make nitrogen, would have / has had a bigger impact (I think). 

As always, there are many factors... and I think the biggest items on farmers' minds lately would be the lower commodity prices for grain and canola relative to recent years, and high land costs... though cattle prices are at all time highs, so that's nice for those with cattle still.


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## supperfly17

humble_pie said:


> at one point i held a CWB preferred. Its dividend would surely be safer than the common. Have not looked into these recently but might be worth a look-see.
> 
> 2 other legs to their banking business were vehicle buys & farm financing (somewhat related i imagine.) Would grain & cattle farms be badly impacted by lower energy prices? would they not benefit instead? the people-gotta-eat theory?


Would you care to explain why you would purchase their preferred shares? And why one would decide to sell them. Thank you.


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## humble_pie

supper i wish i had something useful to say, but i don't. CWB preferreds were just one of those conservative, boring, keep-the-fire-burning positions. I don't even remember the details.

as best ICR, they were redeemables. Their price rose somewhat as i held them, then inevitably began sliding downwards towards the $25 redemption date.

i had a certain gain, plus there'd been a nice dividend all along the way, so i sold em.


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## supperfly17

humble_pie said:


> supper i wish i had something useful to say, but i don't. CWB preferreds were just one of those conservative, boring, keep-the-fire-burning positions. I don't even remember the details.
> 
> as best ICR, they were redeemables. Their price rose somewhat as i held them, then inevitably began sliding downwards towards the $25 redemption date.
> 
> i had a certain gain, plus there'd been a nice dividend all along the way, so i sold em.


Noted, thank you.


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## My Own Advisor

Modest yield and great payout ratio. Interesting....this would be what, Canada's 7th largest bank?


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## gardner

An interesting recent article

http://seekingalpha.com/article/275...adian-bank-for-your-dividend-growth-portfolio



> It is the seventh largest bank by market capitalization but is still less than a 10th of the size of any of the Big Five.


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## passivedividends

I'm really curious to see who's on the opposite side of the gas price hedges in 2015 and 2016.. some O&G companies hedge their production 1-2 years in advance. Banks? Or possibly insurance companies?


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## Nordic

I bought in at just under $30; used margin to do so. It's quite oversold in my opinion, partly due to tax-loss selling. Trailing PE of <11 and Price to Book of about 1.5 (lowest of the big 7 CA banks) means it's sitting at a pretty suppressed price at the moment. I'm anticipating a 20% one-year return with a modest $36 price target.


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## Nordic

Sold today at 32.87 for a nice profit. It rose a bit fast for my liking and all-the-while crude kept drifting down (CWB and crude price are normally correlated). I could see myself buying back in soon though if it drops again to <$31.


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## donald

Well my recent purchase in cwb was a disaster,i fully realize they are heavily tied to O&G(western Canada)
Just curious what other's think about cwb going forward.....It has been trounced of late(about a 15% slide in the last mth)
Yielding above 3 now
Anybody looking and thinking it is oversold?or is the pain going to continue
current price-27.73


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## Eder

CWB is the baby not the bath water.


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## My Own Advisor

Ha. Good one Eder


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## donald

So the consensus is its oversold lol
I was a bit early on this one with entry
You got to pay to play sometimes


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## Killer Z

donald said:


> Well my recent purchase in cwb was a disaster,i fully realize they are heavily tied to O&G(western Canada)
> Just curious what other's think about cwb going forward.....It has been trounced of late(about a 15% slide in the last mth)
> Yielding above 3 now
> Anybody looking and thinking it is oversold?or is the pain going to continue
> current price-27.73


If your timeframe is 3+ years, you will be fine. This is a solid bank and a dividend hero. Just leave it alone, and plan to hold it long term.


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## AltaRed

I agree. It will recover nicely when the oil patch and Alberta recovers. Might take awhile but investing is buying and holding for a long period of time, e.g. decades, is it not?


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## donald

Yes i am a investor(my purchases.div income,hopefully increases and eventually a higher share price wont be realized in 20ish yrs)
Been watching cwb and always wanted a position and thought 30 and change was a good entry(so far not so good)
but i knew what i signed up for
I like there moat and they are a long term play on small/medium business in western canada(not to mention a stud in increasing dividends-past i know)
See how things shake out,would of loved to bought at these prices and having said that might be headed lower yet still


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## gardner

Got a partial fill at 27.80 this morning. Doesn't look like I'll get the rest though.


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## AltaRed

gardner said:


> Got a partial fill at 27.80 this morning. Doesn't look like I'll get the rest though.


There is no hurry. If oil prices remain low for much of 2015, lending will decrease and loan losses will increase (commercial and mortgage) and you might pick this up for less. A 10 year chart shows some support in the $25 range in the last 5 years, but it dipped to under $10 during the financial crisis. IOW, there is likely more hurt yet before the ultimate turnaround.


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## donald

What is your take on the Canadian bank ceo conference Altared?
From the report:Approx 5% of loan book direct exposure to O&G 2% of that to direct drilling.
65% investment grade

Cwb has ran stress tests on various oil prices and has not seen material stress under this exercise

Reading this report(can one trust it,i do not know)this doesn't appear to be as bad as the market thinks(seems like ridiculously low exposure)considering they are Alberta based.


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## jackrabbit000

I sold this at $41.25. I'm watching it and will pick it up again when it goes lower. Not in a rush yet.


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## AltaRed

donald said:


> What is your take on the Canadian bank ceo conference Altared?
> From the report:Approx 5% of loan book direct exposure to O&G 2% of that to direct drilling.
> 65% investment grade
> 
> Cwb has ran stress tests on various oil prices and has not seen material stress under this exercise
> 
> Reading this report(can one trust it,i do not know)this doesn't appear to be as bad as the market thinks(seems like ridiculously low exposure)considering they are Alberta based.


I have not paid any attention to the bank CEO conference nor the report. While I agree direct exposure to O&G is not much, it is the domino effect of the indirects from the O&G crisis the banks really do not know about, and it would be improper to speculate about publicly. I am just of the opinion that bank stock prices got ahead of themselves (investors chasing yield) and now re-entrenchment in progress. How much, how far and for how long, no one knows . 

Thus one should look at some historical (e.g. 10-20 year) financial metrics of the banks to see what likely 'low end' might be for each bank and base one's purchases on that environment. If one does not want to to do that much work, then at least look at the bottoms (2008/2009 excepted) of the stock price curve of the last 20 years and draw the trend line from that. It is at least a reference point for an entry price.


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## donald

Thank you for your relpy!
I know nobody know but from a historical prospective how long do oil cycles lats usually?
Are people of the opinion this will be the worst depressed oil crisis for Alberta ever?
I know so far this are not going well.
Is it going to be sob stories about the entire oil and gas industry for next few years in every major news paper
I am just curious how bad this is in a historical sense.


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## AltaRed

This is off-topic but the 1981-1987 period was a lot worse. The crisis started with Trudeau's NEP that artificially held domestic oil prices much lower than world prices (after the Iran crisis) and it was barely recovering when Saudi turned on the taps in 1986 with $10 oil. Canada's offshore east coast projects were all shelved in the late '80s for several years because of it.

This crisis may be not much worse than than 2008-2009 financial crisis when oil demand dropped so quickly we had $30 oil but then recovered pretty quickly thereafter. I read recently that oil supply/demand cycles occur on average every 3-5 years on average, but I would suggest they more or less follow economic business cycles. There are a lot of highly variable external factors, not the least of which is OPEC.


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## KaeJS

I think it could be time to buy. Got my eye on it.


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## Eder

buy buy buy...the house of pleasure.


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## Homerhomer

I bought a bit on Thursday, will buy a more if it continues to go down, indirect and safe play on oil, yield of just over 3% is not bad, chances of dividend cut pretty much zero, increasing dividends every year in the last few years, 37 % of it's 52 week high, payout will be under 50% even if they get hit pretty high with loan losses.
I am ok to hold this one for a while.


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## besmartrich

I bought at $28.50 and $27.10. The price went down a bit today but if you look at their long term perspective. Here are few of CWB's strengths.

1. CWB has increased its dividend from $0.1075 per share in 2002 to $0.8000 in 2014. That’s 740% increase during 12 years. It survived through various crashes and constantly increased its dividend during that time and continued its growth over 20 years. Would it continue? I strongly think so.
2. CWB’s direct exposure to the energy industry is small at around 6% of total outstanding loans at this time.
3. Despite poor economic conditions in western Canada, CWB posted net income of $54 million in 2015 Q1 increased by 3% compared to the same quarter in 2014.
4. Sold Canadian Direct insurance for $197 million and Valiant Trust’s stock transfer business for $33 million resulting combined gain of $1.25 earnings per common share. The sales are to focus on primary services.
5. Dividend yield of whooping 3.1% at current market price and the current dividend ($0.21 per share) is 11% higher than 1 year ago. Its payout ratio is only 30%. It is substantially lower than Canadian Big 5 banks (46-53%).
6. P/E ratio of 10 is very appealing. Considering its strong performance, it is seriously a bargain regardless where the oil price goes in the future
7. Currently traded in around $27 mark which is close to 5 years low. This stock lost one-third of its value in the past 6 months. I just love when investors get emotional and flee hard and fast which brings stock price down. Short term stock price fluctuation is seriously all about psychology and my favorite time to add my position. “Be fearful when others are greedy and greedy when others are fearful” Warren Buffett…
8. CWB was in good hands and is in good hands. Larry Pollock who used to be the CEO of CWB for 23 years just won 2015 Canadian Business Leader Award. He grew the bank when it had only a few branches to one of the bigger banks in western Canada. The current CEO, Chris Fowler has been helping Larry Pollock over the years to position CWB to be where it is at.


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## Mitchell Silverhar

I'm short since $29.89. What I like is it can't make a 20% gain or 'worst' in value in a day. 
On is support now.


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## KaeJS

You're shorting this? 

Are you crazy?

At what price do you plan to cover?


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## blin10

looks interesting at these levels, i'm in for small position... somewhat play on oil without buying oil companies


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## treva84

Got in today at 26.28. I'm slightly anxious about this one (for obvious reasons) but at a near 52 week low with solid fundamentals I couldn't resist. I understand it's going to be pretty volatile in the short term, but I'm hoping it'll do well long term.


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## donald

Wish I would of loaded up on the bottom
Cwb is up 10% since basically when Mitchell started shorting 
People made it sound like it would be years
Back in the black since I bought in jan.


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## gardner

Seems to be on a tear again this morning -- up 2.6% or so.


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## Fraser19

CWB is having another pull back. Looks tempting at this time, plenty of room for good capital gains.
Also the last two stock splits happened at $50.00 which I suspect is not too far out of reach with a horizon of one to two years depending on how and when oil recovers. The dividend is increased regularly. Also another perk is the drip discount, looks like shares on the open market are dripped with a 2-5% discount. Which is always nice.
I am thinking of picking up 190 Shares, any thoughts on this stock?


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## supperfly17

Fraser19 said:


> CWB is having another pull back. Looks tempting at this time, plenty of room for good capital gains.
> Also the last two stock splits happened at $50.00 which I suspect is not too far out of reach with a horizon of one to two years depending on how and when oil recovers. The dividend is increased regularly. Also another perk is the drip discount, looks like shares on the open market are dripped with a 2-5% discount. Which is always nice.
> I am thinking of picking up 190 Shares, any thoughts on this stock?


Maybe this week you can find a better deal with the big banks instead.


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## Fraser19

I have also been thinking about TD, but I have concerns about not being able to keep up with the DRIP with the capital gains of TD.
I do not have enough cash to DRIP TD. But I have more than enough to DRIP CWB. 

TD seems like a safer bet, no question about that. But CWB seems like it will be easier for me to stay in the DRIP with. Those are my thoughts at this time. Although I am open to thoughts at this time.

I am heading down to Australia on the 4th and will be gone until the 16th, I wont be making any buys until I come back. But both looks like they are a steal of a deal right now.


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## newfoundlander61

Traded it recently for a profit, got back in a few hours ago.


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## My Own Advisor

Fraser19, I think when you can synthetically DRIP any established dividend paying stock like CWB, this is a good thing. Even better at these CWB prices.


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## gladaki

My Own Advisor said:


> Fraser19, I think when you can synthetically DRIP any established dividend paying stock like CWB, this is a good thing. Even better at these CWB prices.


Whats minimum number of CWB you recommend to DRIP CWB effectively


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## FrugalTrader

In order to DRIP 1 share a quarter @ current market price, you would need to own 131 shares ($28.82 divided by the quarterly dividend 0.22). To be safe, and to cover a bit of volatility, you may want to own at least 150 shares.


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## Fraser19

FrugalTrader said:


> In order to DRIP 1 share a quarter @ current market price, you would need to own 131 shares ($28.82 divided by the quarterly dividend 0.22). To be safe, and to cover a bit of volatility, you may want to own at least 150 shares.


From my point of view I figure it is logical to have 200 about shares. I doubt it will take too long for it to get back up into the 40's, one year, perhaps a little longer? Mind as well buy it when the shares are down 25% instead of catching them on the way up.
Also if they get back up to $50 and split again in the semi near future that would be good too, easier to take advantage of the DRIP.

In my mind I imagine that there will probably be another share split within the next two to three years based off previous history. They also have a excellent history of increasing the dividend. I can see this really being a good stock to accumulate shares quickly that have a solid track record of dividend increases.


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## supperfly17

Fraser19 said:


> From my point of view I figure it is logical to have 200 about shares. I doubt it will take too long for it to get back up into the 40's, one year, perhaps a little longer? Mind as well buy it when the shares are down 25% instead of catching them on the way up.
> Also if they get back up to $50 and split again in the semi near future that would be good too, easier to take advantage of the DRIP.
> 
> In my mind I imagine that there will probably be another share split within the next two to three years based off previous history. They also have a excellent history of increasing the dividend. I can see this really being a good stock to accumulate shares quickly that have a solid track record of dividend increases.


Or.....it could half in price after July 5th. Just a thought.


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## Fraser19

Is this in relation to the situation in Greece?


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## supperfly17

Fraser19 said:


> Is this in relation to the situation in Greece?


Yes it is.


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## Fraser19

supperfly17 said:


> Yes it is.


While I do understand that there is risk in the market due to the situation in Greece, I am curious as to how that would have such a devastating effect on CWB? I am not trying to dispute this, I am just interested in your thoughts.

Either way, I don't return to Canada until the 16th. After that I will probably start a position with CWB.


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## supperfly17

Fraser19 said:


> While I do understand that there is risk in the market due to the situation in Greece, I am curious as to how that would have such a devastating effect on CWB? I am not trying to dispute this, I am just interested in your thoughts.
> 
> Either way, I don't return to Canada until the 16th. After that I will probably start a position with CWB.


Just look at what happened Monday with the banks. Same reason, general panic. Although a deal might be reached Sunday and stocks will soar once again.


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## james4beach

It looks to me like CWB closely mirrors the movements of XEG (energy sector), likely as a consequence of the western/Alberta exposure and fortunes directly dependent on the energy industry and the economic growth in Alberta.

Pull up both charts and see for yourself.

Sounds to me like you folks are basically trading the energy sector


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## besmartrich

CWB mirrors energy sector pretty closely. That's why I like about this company. CWB is not as risky as other energy companies as CWB has an attractive TTM P/E but the rewards can be as good as energy companies when oil price recovers.


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## AltaRed

besmartrich said:


> CWB mirrors energy sector pretty closely. That's why I like about this company. CWB is not as risky as other energy companies as CWB has an attractive TTM P/E but the rewards can be as good as energy companies when oil price recovers.


Touche!


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## Nordic

besmartrich said:


> CWB mirrors energy sector pretty closely. That's why I like about this company. CWB is not as risky as other energy companies as CWB has an attractive TTM P/E but the rewards can be as good as energy companies when oil price recovers.


Spot on. I don't own CWB at the moment but it looks very undervalued. P/E right now of around 9.6 = bargain. Once I free up some cash I'll be looking to pick some up.


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## Fraser19

Got in for 208 shares today at 25.75.
To me this is great long term stock. The dividend increases are regular and even with share prices down 40% its a 3.4% yield so they are not paying out like crazy.I think I read earlier they target a 30% pay out ratio, with seems healthy.


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## AltaRed

The one thing that bothers me from getting in circa $25 is the lack of meaningful share price growth over a long period of time. On a 10 year chart, the stock was $32 at the beginning of 2008, almost that again in mid-2011. It also was as low as $25 in late 2011. It was under $10 circa Mar 2009 just to have another data point. Have to wonder if $25-32 is the range of this stock forever.


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## tkirk62

The 52 week high is $43.40, I see it approached $40 in 2013. Go back to about 2000 and the stock was about $5. I think the fact it looks like there is such little growth is during the ten year period you looked at, you had a devastating financial crisis, which hurt every bank, and then this oil price "crisis", which I think has led to CWB being oversold. 

If you look at the historical yield, the only time it has been higher was in the heart of the recession. It looks like the stock usually trades at a P/E of about 13. Even with no earnings growth (doubtful but a possibility), just getting to a P/E of 12 means the stock should return to $32. Earnings growth or any higher of a multiple takes it higher. Plus dividend growth while we get there.

For better or worse this will trade with both banks and oil, likely whichever one is doing worse at any given time. I got in today at $25.66, so I am a believer in the long term potential.


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## newfoundlander61

Holding my position for sure on this one.


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## besmartrich

tkirk62 said:


> The 52 week high is $43.40, I see it approached $40 in 2013. Go back to about 2000 and the stock was about $5. I think the fact it looks like there is such little growth is during the ten year period you looked at, you had a devastating financial crisis, which hurt every bank, and then this oil price "crisis", which I think has led to CWB being oversold.
> 
> If you look at the historical yield, the only time it has been higher was in the heart of the recession. It looks like the stock usually trades at a P/E of about 13. Even with no earnings growth (doubtful but a possibility), just getting to a P/E of 12 means the stock should return to $32. Earnings growth or any higher of a multiple takes it higher. Plus dividend growth while we get there.
> 
> For better or worse this will trade with both banks and oil, likely whichever one is doing worse at any given time. I got in today at $25.66, so I am a believer in the long term potential.


I wish I had some capital to invest in. I bought some and added more again during last winter and it went down further to be at even more attractive price. Gotta love it. Time to buy!


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## BrentPv2

Just bought 160 shares at $25.42..


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## gardner

Down almost 3% this morning. It blew through my 25.15 target on the way to the 52-week low -- what's happening?


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## BrentPv2

No crap eh, but like clock work, anytime I buy stock it usually tanks.


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## besmartrich

BrentPv2 said:


> No crap eh, but like clock work, anytime I buy stock it usually tanks.


Well... That happens quite often these days where the overall economy is stepping back.


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## BrentPv2

Yha, $1 down closed, oh well. I want for longer term. 

Oh well.


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## gladaki

BrentPv2 said:


> Yha, $1 down closed, oh well. I want for longer term.
> 
> Oh well.


same here 
But, I am small investor
Bought 40 shares at 24.75..
will add more if it dips 5% more
Hope to have some money by that time


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## BrentPv2

gladaki said:


> same here
> But, I am small investor
> Bought 40 shares at 24.75..
> will add more if it dips 5% more
> Hope to have some money by that time


Me too, I went for 160 at $24.42


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## james4beach

gardner said:


> what's happening?


Oil and energy stocks are declining. Like I wrote earlier; it's highly correlated to the energy stocks.
http://stockcharts.com/h-sc/ui?s=CWB.TO&p=D&yr=0&mn=9&dy=0&id=p18095981265

Not much of a mystery. If the energy sector declines more, CWB will likely decline with it too. See the chart


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## Eder

I think it is more due to heavy shorting as a way to play the imminent real estate crash that many believe is inevitable. I recently added this bank as I think Alberta & BC other than the lower mainland real estate has already began to soften. CWB direct exposure to oil businesses is about 6% of total loans...not all those loans are at risk.
The shares may fall another 10% due to shorting pressure but for a long term hold there is the beauty of growth and dividend growth.


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## gladaki

Eder said:


> I think it is more due to heavy shorting as a way to play the imminent real estate crash that many believe is inevitable. I recently added this bank as I think Alberta & BC other than the lower mainland real estate has already began to soften. CWB direct exposure to oil businesses is about 6% of total loans...not all those loans are at risk.
> The shares may fall another 10% due to shorting pressure but for a long term hold there is the beauty of growth and dividend growth.


True ..This is pure gold share...I will add more shares as i save money and keep avg down


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## newfoundlander61

Added this moring to my current holding at $24.07, may go lower but not possible to pick a bottom in most stock purchases.


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## humble_pie

Eder said:


> I think it is more due to heavy shorting as a way to play the imminent real estate crash that many believe is inevitable. I recently added this bank as I think Alberta & BC other than the lower mainland real estate has already began to soften. CWB direct exposure to oil businesses is about 6% of total loans...not all those loans are at risk.
> The shares may fall another 10% due to shorting pressure but for a long term hold there is the beauty of growth and dividend growth.


not dissing CWB at all but don't they also have a lot of car loans? these would be even shakier than mortgage loans, as alta layoffs continue?


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## Eder

I cant find the break out for car loans, but personal loans including personal mortgages comprise 16% of total loans...about 42% of which are in Alberta. Their largest loan group is commercial mortgages.


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## humble_pie

tnkx, good solid info


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## gladaki

Eder said:


> I cant find the break out for car loans, but personal loans including personal mortgages comprise 16% of total loans...about 42% of which are in Alberta. Their largest loan group is commercial mortgages.


I have car loan with them 
they are taking 6% interest from me


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## blin10

im buying at these levels


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## Eder

They do say they want to increase their equipment loans & leasing business with the 230 mil they sold an insurance branch for. I dont know at what level the shorts will cover at but this thing is no Sino Forest Products.


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## gladaki

Eder said:


> They do say they want to increase their equipment loans & leasing business with the 230 mil they sold an insurance branch for. I dont know at what level the shorts will cover at but this thing is no Sino Forest Products.


Damn, Did I miss the bottom 
I need 90 more shares to have DRIP


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## Fraser19

I am sure in a year or two whatever price you pay for it within the next few weeks will be damn close enough to the bottom.


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## BrentPv2

gladaki said:


> Damn, Did I miss the bottom
> I need 90 more shares to have DRIP


How many do you need for a DRIP?


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## tkirk62

BrentPv2 said:


> How many do you need for a DRIP?


The dividend is 22 cents per quarter. At today's price you would need 114 shares to DRIP one share. However most of us believe CWB's share rice should be higher, so you will need more if the share price is higher at the time of the next dividend. Personally I have 160 shares, so I will DRIP one share unless CWB is over $35.20. I'm confident my number of shares should be enough to keep up a DRIP


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## BrentPv2

tkirk62 said:


> The dividend is 22 cents per quarter. At today's price you would need 114 shares to DRIP one share. However most of us believe CWB's share rice should be higher, so you will need more if the share price is higher at the time of the next dividend. Personally I have 160 shares, so I will DRIP one share unless CWB is over $35.20. I'm confident my number of shares should be enough to keep up a DRIP


Thanks, Funny enough, I too hold 160.


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## bleagues

I was looking at CWB share price and comparing it to the crash in '08. During that time the share price tanked aprox 70% from its Dec 2007 high of $31 to its March 2009 low of $10.

Currently it is down aprox 45% from its July 2014 high of $43.30. 

I hope this does not follow the same path as the meltdown during 2007-2009. If it does, we are looking at something around $13!

OUCH!


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## newfoundlander61

It seems to have settled down a little lately but who really knows for sure.


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## lost in space

I'm looking at CWB right now and based on historical P/E ratios (remember the stock price follows earnings) it's dirt cheap right now, way below it's historical average of 15. If it were to return to it's average PE of 15 you'd see a massive 17 dollar or 80% a share gain but my concern is that it's like anything Alberta related investor attitudes won't change till the price of oil at least stabilizes. And I don't see that happening for a least another year or so. But I think once it changes there is some potential for some nice profits.


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## treva84

lost in space said:


> I'm looking at CWB right now and based on historical P/E ratios (remember the stock price follows earnings) it's dirt cheap right now, way below it's historical average of 15. If it were to return to it's average PE of 15 you'd see a massive 17 dollar or 80% a share gain but my concern is that it's like anything Alberta related investor attitudes won't change till the price of oil at least stabilizes. And I don't see that happening for a least another year or so. But I think once it changes there is some potential for some nice profits.


They have a long history of increasing their dividend as well (currently 24 years). I agree very attractive valuation; I purchased some more shares in mid Jan.


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## Pluto

Yep, I think this ones a buy, considering my strategy of buying on bad news and factors others have mentioned already - low p/e, yield, over 20 consecutive years of increasing dividend...

Often stocks bottom out around the time a recession is announced, and guess what, Alberta is officially in recession. No guarantees it is the bottom for this one, but it is a heck of a lot better buying now in this worrisome time compared to the don't worry, be happy days of 2014.


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## TurryInAHurry

Glad to be posting my first message 

Attractively priced indeed. What discourages me just a tad is Canada's somewhat inflated housing market. Whether CWB is heavily involved or not in the industry, the market will most likely perceive them to be, and therefore when or if a housing decline happens, a greater depreciation will take place in the stock. Making it even more attractively valued. All theoretical of course......for now ehe.


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## besmartrich

TurryInAHurry said:


> Glad to be posting my first message
> 
> Attractively priced indeed. What discourages me just a tad is Canada's somewhat inflated housing market. Whether CWB is heavily involved or not in the industry, the market will most likely perceive them to be, and therefore when or if a housing decline happens, a greater depreciation will take place in the stock. Making it even more attractively valued. All theoretical of course......for now ehe.


Well said. Everything seems to be suggesting that most of Canadian banks are undervalued however only one thing that makes me scared at this time is the inflated housing market. It is a ticking bomb and am quite confident it will explode but not too sure when it will really explode.


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## lost in space

Noticed that it peaked last summer at around 40 dollars a share then whomp the bottom fell out. Earnings and payout ratio have been pretty consistent so it's not like it pulled a Potash or something. So my best guess is the price of oil. 

I'm also got this stock at the top of my watch list as if you compare it to other undervalued stocks (Westjet and Air Canada come to mind) it's a very solid boring blue chip stock. My favourite kind to buy. Like I mentioned if it comes back just to it's historical P/E ratio you're looking at some serious cash.

Edit: I'm not too worried about the housing market, the banks are pretty good at passing the risk on to the taxpayer, so there's no risk of a dividend cut, at worse they might a delay an increase.


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## Pluto

lost in space said:


> Noticed that it peaked last summer at around 40 dollars a share then whomp the bottom fell out. Earnings and payout ratio have been pretty consistent so it's not like it pulled a Potash or something. So my best guess is the price of oil.
> 
> I'm also got this stock at the top of my watch list as if you compare it to other undervalued stocks (Westjet and Air Canada come to mind) it's a very solid boring blue chip stock. My favourite kind to buy. Like I mentioned if it comes back just to it's historical P/E ratio you're looking at some serious cash.
> 
> Edit: I'm not too worried about the housing market, the banks are pretty good at passing the risk on to the taxpayer, so there's no risk of a dividend cut, at worse they might a delay an increase.


I like the way you think. You are going to be rich, if you are not already. 

CWB is primarily an Alberta based bank: Alberta got hit with the oil debacle, and Alberta's real estate is also under downward pressure. The way it looks to me, the worst has already happened to this bank. The fearful weak holders have left the stock, and its time to buy.


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## doctrine

CWB is definitely cheap but there are going to be secondary impacts to the oil price out west that will eventually cut CWB's growth. It's at best fairly valued, in my opinion. BNS and CM are only at a slight premium and NA trades at similar value to CWB, so that is definitely going to cap the upside.


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## Pluto

doctrine said:


> CWB is definitely cheap but there are going to be secondary impacts to the oil price out west that will eventually cut CWB's growth. It's at best fairly valued, in my opinion. BNS and CM are only at a slight premium and NA trades at similar value to CWB, so that is definitely going to cap the upside.


Secondary impacts could very well hurt CWB's growth. But isn't it possible the current price, down from 40, already reflects that? And wouldn't one be getting in near the ground floor of a new cycle and growth eventually pick up?

Just trying to clarify: BNS and CM are at a slight premium to what? slightly over valued? 
And to clarify: are you saying because NA is valued similar to CWB, CWB's upside is capped? You are making a connection here that I don't see. I'm not sure what value measures you are using.


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## peterk

I think doctrine is saying that CWB's P/E is only marginally lower than those other banks, yet its exposure to Alberta is much higher and the risk to its income in much higher. I would tend to agree. While I own CWB, I would probably add money to the other banks instead of it now. CWB's previous $40 high and above average P/E was a reflection of Alberta's above average growth rate.

Even if oil recovers quickly, Alberta's growth rate probably will not. Not so fast, anyways. If oil is $100/bbl tomorrow it will still take Alberta 10 years to get "back to normal" (ie. above average growth) like it was in 2014... The only way I see CWB above $40 in the next few years is through organic growth and expanding market share, not through an Oil/Alberta recovery.


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## lost in space

Pluto said:


> Secondary impacts could very well hurt CWB's growth. But isn't it possible the current price, down from 40, already reflects that? And wouldn't one be getting in near the ground floor of a new cycle and growth eventually pick up?
> 
> Just trying to clarify: BNS and CM are at a slight premium to what? slightly over valued?
> And to clarify: are you saying because NA is valued similar to CWB, CWB's upside is capped? You are making a connection here that I don't see. I'm not sure what value measures you are using.


Actually all the banks are currently well under there traditional PE ratio. Regarding CWB my feeling is that it will come back at some point but a lot depends on investor sentiment and as others have mentioned as lot will depend on the price of oil and how the housing market play out. So it's very possible it could go sideways for several years.


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## treva84

lost in space said:


> Actually all the banks are currently well under there traditional PE ratio. Regarding CWB my feeling is that it will come back at some point but a lot depends on investor sentiment and as others have mentioned as lot will depend on the price of oil and how the housing market play out. So it's very possible it could go sideways for several years.


At least we can collect dem growing dividends :tiger:


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## AltaRed

Until the surplus of 1-2 million barrels per day of oil supply is worked off, Alberta continues to implode. The cascading effects are taking hold now in the retail and hospitality sectors. I think we are going to see continued significant job losses in AB for some time to come. Not only residential mortgage vulnerabliities for the banks, but also auto loans, business loans and mortgages. How are the big car dealerships, many of whom built brand new big facilities in the past 10 years, going to service their mortgages when sales are dropping off the planet? 

Restaurants in Calgary are closing in rapid fashion. http://www.theglobeandmail.com/repo...ictims-of-oil-price-collapse/article27946636/ What has happened to their business loans? My guess is CWB and ATB are taking some lumps.... The next quarterly from CWB may be telling.


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## donald

Once the Macau junket market goes back to sheldon and steve(where it belongs)
The wanna be(target demo sweet spot-35 yr old man controlled by his wife and kids)
Pours right into Cwb lap
Lmfa
Where the displaced market class going in Van
Smart money re-organizing in patch
Like a game of monopoly
Boardwalk always wins


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## donald

I think about going long wynn lol


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## Pluto

peterk said:


> I think doctrine is saying that CWB's P/E is only marginally lower than those other banks, yet its exposure to Alberta is much higher and the risk to its income in much higher. I would tend to agree. While I own CWB, I would probably add money to the other banks instead of it now. CWB's previous $40 high and above average P/E was a reflection of Alberta's above average growth rate.
> 
> Even if oil recovers quickly, Alberta's growth rate probably will not. Not so fast, anyways. If oil is $100/bbl tomorrow it will still take Alberta 10 years to get "back to normal" (ie. above average growth) like it was in 2014... The only way I see CWB above $40 in the next few years is through organic growth and expanding market share, not through an Oil/Alberta recovery.


OK, thanks. I get the perspective now - risk to its income higher, yet valued about the same as NA. That seems to make sense. 
I think I am going to buy some anyways, but not a lot. I have good luck buying in these "all is lost" scenarios. I'm not counting on a v bottom and it scooting right back to 40. I'm willing to be patient and collect a little dividend along the way.


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## londoncalling

Pluto said:


> ... I'm not counting on a v bottom and it scooting right back to 40. I'm willing to be patient and collect a little dividend along the way.


Me too. I plan to hold, add and sell this as it goes up and down over the next 20+ years. If it takes 3 years to go up I have no problem with that as long as it keeps the dividend and grows it ever slow slightly. 24 year history of dividends should indicate the probability that they will continue to do so into the realm of more likely than likely not. I am happy to hold. 

Cheers


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## james4beach

Amazing correlation between CWB and XEG. Wow.

The question is really, what are their loan losses like (non-performing / impaired loans) and are non-performing loans growing at a rapid pace?

I don't know the answer to that, because I haven't studied their books. Hopefully you people who buy their shares have.


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## humble_pie

^^

i've never understood the fascination with CWB. If it's supposed to be a proxy for alberta & its price history correlates to XEG, then why wouldn't one buy the lower-risk ETF?


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## james4beach

CWB (green) and XEG (blue) plotted together. My proprietary tool says the correlation coefficient is +0.80 over the last 6 months


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## Pluto

humble_pie said:


> ^^
> 
> i've never understood the fascination with CWB. If it's supposed to be a proxy for alberta & its price history correlates to XEG, then why wouldn't one buy the lower-risk ETF?


Actually that's a very good point. Had me stumped there. The bank management is taking steps to broaden their base. If successful, the co relation won't be so high. Even so, that will probably take a long time, so you point is well taken. Anyway, I don't think anyone here is betting the farm on CWB, at least I'm not.


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## treva84

humble_pie said:


> ^^
> 
> i've never understood the fascination with CWB. If it's supposed to be a proxy for alberta & its price history correlates to XEG, then why wouldn't one buy the lower-risk ETF?


My strategy is divvy growth investing - I bought CWB initially because it has a long history (for a Canadian company) of growing dividends. Also, reading their annual reports, I like how management outlines very specific goals (i.e. target ROE of this ; this specific pay out ratio; growing earnings by this much, etc) rather than stating nebulous things like "we plan to enhance share holder value". They also reflect on their previous goals and update whether or not they met them. This tells me that management is thinking of the share holders.

I purchased more CWB this year as I think the valuation is very attractive.

Personally, I wouldn't buy XEG because it doesn't fit with my dividend growth strategy.


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## Eclectic12

humble_pie said:


> james4beach said:
> 
> 
> 
> Amazing correlation between CWB and XEG.
> Wow ...
> 
> 
> 
> ^^
> 
> i've never understood the fascination with CWB.
> If it's supposed to be a proxy for alberta & its price history correlates to XEG, then why wouldn't one buy the lower-risk ETF?
Click to expand...

I'm not sure there is a fascination ... though if it is a proxy as claimed, then the risk factors are the similar, are they not?

One has a controllable MER (i.e. commissions) and one has an annual MER.


Cheers


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## spongewen

Up 16% from bottom, decide to buy some shares today, still decent above 4% yield. If oil stabilize and raise, it will be a good long term entry point.


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## lost in space

Looking at taking some profits and considering CWB, according to Fastgrapsh it's massively undervalued.Historal PE ratio is 15 but my take is it tends to adhere closer to 13 but that still alows for a decent 10 dollar a share gain. My own take is that it will tend to stick to the 20-30 range for a while but that's still a 30% gain. I'll keep an eye on it and if it dips towards the 20 range I'll pick it up


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## mreconomic

I dont thinkl there is an oportunity there to make any real money... Yes, probably it is quite stable so u wont lose money but to me seems a bad idea to enter


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## hollyhunter

CWB.TO Bullish technical indications: MACD goes green, %K line is on top of %D line and RSI is in bull territory, which stands at 66.29 with positive bias.


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## Pluto

I wouldn't hesitate to buy some. I bought back around 22. It will survive, the the oil situation will eventually sort itself out and CWB will wind its way back into the 30's. 

Oil will probably pullback some after this freeze meeting, and cwb will probably react as well giving a better buying opportunity. 
Even at 26 I think it is a buy, every action has a reaction so might as well wait for the reaction.


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## treva84

I'm long on CWB. They have a very strong history of raising their dividend as well - they have raised it twice yearly (Dec, June) since 2010. They'll soon be declaring the June payment and I think there will be another raise. I also think the stock is still a bit undervalued - IMO CWB is a great buy.


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## damaaster

treva84 said:


> I'm long on CWB. They have a very strong history of raising their dividend as well - they have raised it twice yearly (Dec, June) since 2010. They'll soon be declaring the June payment and I think there will be another raise. I also think the stock is still a bit undervalued - IMO CWB is a great buy.


I bought @ 23.50 last month. No plans on selling. Looking to add if it drops to 23 or under again.

They've raised their div something like 23 consecutive times, have a low payout ratio and are slowly diversifying away from Alberta. Long all the way!


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## gardner

It's on a tear this morning. I would have thought it would be down on the oil situation from yesterday.


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## Pluto

Yep, that's what I thought, but no. The Witch of Wall street is performing her tricks again. Just when I think I have her figured out, presto! a surprise move. Now it appears that oil is in a bull market, so CWB gets some attention. 

In the meantime I'm happy as CWB is one of my best performers this year: up 23% from purchase price. Another instance of buy during times of pessimism.


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## daddybigbucks

CWB is a $30/ share bank. Anything under that is a deal or what i have found over the past few years.


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## Nordic

I've ridden CWB, BNS, and NA up for some significant gains after buying at the lows a few months ago.
The one thing I'm now becoming concerned about however, is that Canadian consumer debt levels are at record highs (over $1.65 owed for every $1.00 of after-tax annual income and continue to increase). Should there be a credit-crunch or housing bubble burst the banks are going to take a pounding (they have mortgage loans in the tens of billions each). 
http://www.theglobeandmail.com/repo...its-record-in-fourth-quarter/article29172712/

Also see the graph on page 5 of the following link. Note that the graph ends in 2013; the blue line would now be roughly where the red line was in late 2007.
https://www.fraserinstitute.org/sit...erm-perspective-on-canadas-household-debt.pdf

I'm holding for now, but watching closely.


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## godblsmnymkr

looks like massive short covering today. maybe american hedge fund managers realizing Armageddon is not going to happen in the canadian banking space after all. gotta check out the short %.


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## hollyhunter

CWB.TO has an ongoing P/E of 6.93, which indicates that it is undervalued. RSI is trading near to 73.40 level with positive bias, MACD and Signal line is sustaining above the zero level line, an upward movement is expected.


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## godblsmnymkr

hollyhunter said:


> CWB.TO has an ongoing P/E of 6.93, which indicates that it is undervalued. RSI is trading near to 73.40 level with positive bias, MACD and Signal line is sustaining above the zero level line, an upward movement is expected.


unless KSA and russia flood the market with oil supply and CWB takes a sh1t.
( I use TA as well and agree the stock looks bullish but its really all predicated on oil so technicals dont mean as much as usual. also XEG broke out today)


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## damaaster

godblsmnymkr said:


> unless KSA and russia flood the market with oil supply and CWB takes a sh1t.
> ( I use TA as well and agree the stock looks bullish but its really all predicated on oil so technicals dont mean as much as usual. also XEG broke out today)


Huge drop in price today on news of some big losses due to oil situation.

Could be another good buying opportunity soon if you believe in this company long term.


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## Nordic

damaaster said:


> Huge drop in price today on news of some big losses due to oil situation.
> 
> Could be another good buying opportunity soon if you believe in this company long term.


Sold CWB, National Bank, and Scotiabank common shares last week and moved the money into fixed-rate preferreds (BMO and Scotiabank). So far this move has saved me around 8% of losses. 
Consumer debt levels are too scary for me to be invested in bank common shares any longer.


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## treva84

damaaster said:


> Huge drop in price today on news of some big losses due to oil situation.
> 
> Could be another good buying opportunity soon if you believe in this company long term.


Bad news, likely to get worse before it gets better. I wonder if they'll still increase their dividend come June (historically they increase their dividend 2x / year, going back to to 2011). Time will tell!


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## damaaster

treva84 said:


> Bad news, likely to get worse before it gets better. I wonder if they'll still increase their dividend come June (historically they increase their dividend 2x / year, going back to to 2011). Time will tell!


I'm gonna bet they do.

Even with this bad news they are still profitable and have a low payout ratio. 
I'll be looking to add a few hundred shares if it drops again.


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## hollyhunter

CWB.TO has an ongoing P/E of 6.39, which indicates that it is undervalued. From the relationship between price and moving averages; we can see that: This stock is NEUTRAL in short-term; and BULLISH in mid-long term.


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## godblsmnymkr

hollyhunter said:


> CWB.TO has an ongoing P/E of 6.39, which indicates that it is undervalued. From the relationship between price and moving averages; we can see that: This stock is NEUTRAL in short-term; and BULLISH in mid-long term.


you can mostly discount any earnings metrics for CWB and just look at the price of oil, because thats whats going to be moving the stock for the foreseeable future.


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## daddybigbucks

i dont agree.
CWB has been tracking all the other banks quite consistantly. Only since 2015 till now, has it been downtracking but hasnt been following oil either.
I just think all investing money has left Alberta for the time being and when it does return, CWB will jump up 20%.


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## hollyhunter

CWB.TO has been showing support at 23.35 and resistance at 27.03. Bullish cross in Stochastic oscillator and RSI is trading near to 48.44 level with positive bias.


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## Holland

Anyone know why this stock has been hit so hard the last couple of days?


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## damaaster

Most likely:

http://www.mortgagebrokernews.ca/ne...ank-announces-q3-earnings-decline-213282.aspx

Also still a negative feeling around Alberta


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## james4beach

CWB is doing about what every other Canadian bank stock is doing. There is no evidence in the price movement that this is being beaten up. See this chart, which shows CWB in pink and XFN (banking sector) in black over the last year:

http://stockcharts.com/h-sc/ui?s=CWB.TO&p=D&yr=1&mn=0&dy=0&id=p60599033165

CWB is tracking XFN nearly perfectly for the last year, other than few periods where it went much lower or higher than the sector. The two performances are slightly different now, but you can see visually that it's within "noise".

Really, CWB is performing about average for the sector. It's *not* underperforming.


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## hollyhunter

CWB.TO has an ongoing P/E of 6.85, which indicates that it is undervalued. Technical buying signal was on.


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