Weekly Issue #3
The last two weeks: a great company priced too high (Canadian Tire — wait) and a cheap, good one hiding in plain sight (Ingredion — buy). This week is a cheap, high-quality one too — with a twist worth learning. It’s a bank, and banks reward you for reading them a little differently. Do that, and Stifel looks good.
Stifel Financial (NYSE: SF) — ~$81
Stifel is a fast-growing brokerage and wealth-management firm — the kind of steady financial that compounds quietly. It’s cheap on the measures that matter for a bank, and it’s raised its dividend for nearly a decade. Here’s the read.
| The check | Reading | Verdict |
|---|---|---|
| Cheap on earnings? (P/E) | 8.9 | ✓ Genuinely cheap |
| Priced vs book (P/B) | 1.4× | ✓ Fair for a 16% ROE |
| Quality — return on equity | 16% | ✓ Strong |
| Dividend growth | 9 straight years | ✓ Every year since 2017 |
| Wall Street view | Buy · $90 target | ✓ ~11% upside |
Bottom line: cheap (~8.9× earnings), high-quality (16% ROE), and a serial dividend-raiser — a real “buy the business” case. Just not the 49%-off fire sale the screen implies.
1. Price vs earnings (P/E): 8.9 — under Graham’s ceiling of 15, an earnings yield above 11%. For a company earning the returns this one does, that’s a genuinely cheap price.
2. The number that actually matters — return on equity: 16% — A brokerage’s whole job is turning capital into profit, and Stifel does it well — and consistently. For a financial, this tells you far more than any tidy Graham price formula.
3. A dividend-growth machine. — Stifel reinstated its dividend in 2017 and has raised it every single year since (split-adjusted). It pays $0.34 a quarter today — about $1.36 a year, a ~1.7% yield. Modest income, but a fast-growing one riding a rising share price: a growth story, not an income stock.
4. Priced vs book: 1.4×. — A slight premium to book value — exactly right for a company earning 16% on that book. The banks that trade below book are usually cheap for a reason; Stifel isn’t one of those.
5. What Wall Street thinks: — a consensus Buy (13 buys, 9 holds, no sells) with an average price target of ~$90 — about 11% above today. Not a moonshot; a steady climb.
The one adjustment for a bank — and how the app makes it for you
Here’s the insight most people miss. A financial like Stifel isn’t valued the way a factory is — its “assets” are loans, trading positions, and client cash, not machines and inventory. So you weigh a bank on a different set of measures: its return on equity, its dividend record, and its price-to-book — exactly the ones in the scorecard above.
This is where the app earns its keep: the moment you pull up a financial, it shows a “read this first” banner telling you to use the bank lens, and it quietly sets aside the tests built for factories (it won’t score a bank on the Altman bankruptcy model, for instance — that one isn’t meant for them). Read Stifel the right way and it holds up nicely: cheap, profitable, and paying you more every year.
The price
At ~$81, Stifel trades near 8.9× earnings with a 16% return on equity — a fair-to-cheap price for a quality compounder. Wall Street’s average target is ~$90 (about 11% up), and the stock sits right on its long-term uptrend (its 200-day average near $79). Today’s price is a reasonable entry; a pullback toward the low-$70s (its 52-week low is ~$68) would be a gift.
One honest note: there’s no insider buying to lean on here — the recent filings are routine board share grants and one small director sale — so this is a fundamentals-and-valuation call, not a follow-the-insiders one.
Which account?
Stifel is US-listed, so its dividend is a US dividend — and here the usual “US payer → RRSP” rule comes with a twist. An RRSP waives the 15% US withholding tax by treaty, so more of the dividend reaches you. But Stifel yields only ~1.7% — the real prize is the growing dividend and the rising share price, not today’s income. In a TFSA, that withholding costs you almost nothing (15% of ~1.7% is about a quarter-percent a year), and in exchange every dollar of capital gain comes out completely tax-free. So: optimizing the dividend points to the RRSP; but for a low-yield, growth-oriented name like this, the TFSA’s tax-free upside can matter more. Both are defensible — pick the one that fits what you’re really buying: the income, or the growth.
The point: not every business is valued the same way — and knowing that a bank earns the bank lens (returns, dividends, book value) is exactly the edge that separates a real analysis from a stock-screener printout. Read Stifel that way and it’s a cheap, high-quality, dividend-growing business worth a serious look.
Free — including the “read this first” context for financials — then run any US or Canadian stock you like.