CANADIAN IMPERIAL BANK OF COMMERCE $98 (Toronto symbol CM; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 397.4 million; Market cap: $38.9 billion; Price-to-sales ratio: 2.3; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.cibc.com) is Canada’s fifth-largest bank, with $397.1 billion of assets.
CIBC prefers to focus on domestic banking instead of expanding internationally; Canada accounts for around 85% of its revenue.
The bank recently teamed up with Tim Hortons (see page 76) to launch a new loyalty credit card called the Double Double Visa. This card lets users earn points toward coffee and food at Tim Hortons.
The card features two separate buttons. Users can press the blue Visa button when they pay for their purchases and 1% of the total will go toward their “Tim Cash” rewards. Pressing the red Tim Hortons button lets users redeem their points.
CIBC will probably absorb most of the cost of launching the card and installing the necessary equipment. However, the card should help it attract new banking customers and partly offset the recent loss of the Aeroplan travel rewards program to TD.
The bank’s focus on Canada hurts its growth but also cuts its risk. Its fiscal 2014 earnings should rise 2.4%, to $8.99 a share from $8.78 in 2013. The stock trades at 10.9 times that forecast. The $4.00 dividend yields 4.1%.
CIBC is a buy.
