Bank of Nova Scotia $30 - Toronto symbol BNS

BANK OF NOVA SCOTIA $30 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 990 million; Market cap: $29.7 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average) is Canada’s third-largest bank, with assets of $507.6 billion. Bank of Nova Scotia has the largest international operations of the big five banks, with a third of its earnings coming from overseas. It prefers to focus on developing countries in Latin America and Asia, where it can quickly expand earnings and market share.

Latest investment looks promising

Bank of Nova Scotia recently agreed to increase its stake in Thailand’s Thanachart Bank from 24.98% to 49%. Thanachart is Thailand’s eighth largest bank by assets, and that country’s leading automobile lender. To put the $270-million purchase price in context, Bank of Nova Scotia earned $3.1 billion, or $3.05 a share, in fiscal 2008, down 22.4% from $4.05 billion, or $4.01 a share, in the prior year. If you disregard writedowns of securities, earnings per share would have fallen 2.3%, to $3.91 from $4.00. Revenue fell 4.9%, to $11.9 billion from $12.5 billion. Troubled loans accounted for 0.83% of total loans, compared to 0.65% a year earlier. The stock now trades at 8.5 times Bank of Nova Scotia’s likely 2009 earnings of $3.55 a share. The $1.96 dividend yields 6.5%. Bank of Nova Scotia is a buy.

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