Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is coming off a disappointing earnings result. That led to a sizable selloff which saw the big bank drop 3.5% on Thursday.
By TD standards, that's a very significant one-day decline. It's even pushed the stock into oversold territory. With a Relative Strength Index (RSI) of 25, the stock is well below the RSI 30 threshold which indicates there's been an unusually high level of selling activity.
The last time the stock was oversold was back in August when it was hovering around the $71 mark and would eventually recover and rise back up to $77. TD stock is likely to recover again.
After all, it's one of the top bank stocks in the country and there's little doubt that it won't continue to grow and produce profits. With strong fundamentals and a good dividend of around 4%, it's hard not to like TD as a long-term investment.
However, TD is not immune from short-term fluctuations, and so it may face some headwinds now and then but they aren't likely to last. As long as the economy is doing well, so too will a top bank stock like TD which makes money off loaning funds to companies and individuals who are doing well and who don't put the bank at much risk of default.
At just over $73 as of Thursday's close, TD isn't still at a 52-week low but it could still be a good time to lock-in the stock. TD hasn't stayed at these levels for long and it may only be a matter of time before investors realize what a great deal it is and the stock bounces back up.
