CIBC has strong recovery potential

Article Excerpt

The shares of CIBC are down 19% in the past year on fears that a slowing economy will lead to big loan writedowns. However, the tougher new lending standards and stress-tests that the federal government brought in following the 2008 financial crisis help cut that risk. The bank’s latest dividend increase is also a sign that it remains confident in its long-term prospects. CANADIAN IMPERIAL BANK OF COMMERCE $57 is a buy. The bank (Toronto symbol CM; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 917.8 million; Market cap: $52.3 billion; Price-to-sales ratio: 2.3; Dividend yield: 6.1%; TSINetwork Rating: Above Average; www.cibc.com) is the smallest of Canada’s Big Five banks by market cap. To cut its overall reliance on Canada, which accounts for about 85% of its revenue, CIBC paid $6.6 billion in cash and stock for Chicago’s PrivateBancorp in June 2017. That firm mainly lends to small and medium-sized businesses. The bank is also adding attractive businesses in Canada. In March 2022, it acquired…