Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) released a stellar Q2 on Wednesday that saw its profits rise 26% from a year ago. The bank continues to see strong growth in the U.S. as its acquisition of PrivateBancorp Inc. is starting to prove worthwhile. The bank’s lack of diversification has kept the stock down and trading at lower multiples than its more diversified peers, but that may be a thing of the past.
With a greater presence in the U.S., CIBC will be less exposed to the domestic market and worries relating to the Canadian economy. There are now many more avenues that CIBC can continue to grow its top line, and that makes the stock a very appealing long-term buy.
Year-to-date the share price is down 5% and despite the earnings beat investors were not bullish on the stock as it actually went further down in price on Wednesday. At a price-to-earnings ratio of 11 and a price-to-book multiple of 1.7, CIBC’s stock trades at low multiples and is at more of a discount than its peers.
However, that may change as the company continues to grow its business south of the border, as that could generate a lot of excitement in the stock.
CIBC’s stock also pays investors a very strong dividend of 4.6% per year, and payouts have grown nearly 40% over the past five years. Although it’s hard to go wrong with any of the big-five bank stocks in Canada, CIBC has a lot of upside and it could net you stronger returns in the long run.
