Canadian Western Bank updated October 1, 2017

Canadian Western Bank is updated and rated Buy at $33.71. This stock is up 11% this year. It’s also up 42% from the low it reached in May when it was dragged down by concerns about sub-prime residential real estate lending when Home Capital suffered a run on the bank. It’s up 33% since we rated it Strong Buy at $25.37 on June 3. On more than one occasion over the years, this bank has sold at very attractive prices when investors were basically in something of a panic mode. The stock remains well below its all-time highs of over $40 that it traded at in July 2014. I thought it was good value in the mid- to low thirties in the last half of 2014 but it has taken a long time to get back to that level.

At this time the bank is reporting progress on many fronts. I considered rating it (higher) Buy but I went one notch lower to pay respect to the fact that banks are highly leveraged and that additional bad news in terms of loan loses is possible. Subscribers should also review our report to get a better sense of why the stock is rated Buy.

It is my second largest position. Having added significantly to my position at various prices on the way down including around $28 and $26 (as I recall) it may be prudent for me to begin to trim the position at some point simply to raise cash and for diversification. For the moment, I am inclined to maintain my full position.