The S&P/TSX Capped Financial Index fell marginally on Tuesday, March 28. Canadian bank stocks have been impacted by the volatility in the global banking sector this month. Fortunately, this provides a great buying opportunity for investors. Today, I want to look at two top Canadian banks that look undervalued right now.
TD Bank (TSX:TD)(NYSE:TD) is the second largest Canadian bank by market cap. It also boasts the largest United States footprint of its peers. Shares of TD Bank have dropped 12% month-over-month as of close on March 28. That pushed the stock into negative territory for the year-to-date period.
This bank posted adjusted net income of $4.15 billion or $2.23 per diluted share in Q1 2023 – up from $3.83 billion or $2.08 in the prior year. TD Bank stock currently possesses a favourable price-to-earnings ratio of 9.6. Moreover, it last had a Relative Strength Index (RSI) of 34, just shy of oversold territory.
Bank of Montreal (TSX:BMO)(NYSE:BMO) is the third largest of the Big Six Canadian bank stocks. Its shares have dropped 5.8% so far in 2023. The stock is now down 21% year over year.
In Q1 2023, BMO delivered adjusted net income growth of 3% to $699 million. However, its Wealth Management and Capital Markets segments suffered double-digit percentage dips in net income. Shares of BMO possess an attractive P/E ratio of 7.3 at the time of this writing. Meanwhile, it last had an RSI of 31, putting it just outside of technically oversold levels.
