Royal Bank of Canada (RY): A Bull Case Theory

We came across a bullish thesis on Royal Bank of Canada (RY) on Substack by Peter Thomason. In this article, we will summarize the bulls’ thesis on RY. Royal Bank of Canada (RY)’s share was trading at $119.83 as of May 8^th. RY’s trailing and forward P/E were 13.43 and 12.32 respectively according to Yahoo Finance.

A view of a busy banking hall, customers engaging with banking staff to conduct their financial transactions.

Royal Bank of Canada (RY), the country’s largest bank, is a dominant player across every major financial segment, including personal and commercial banking, wealth management, capital markets, insurance, and investor services. Its business model is uniquely advantaged by Canada’s highly concentrated banking system, where the top five banks control 90% of the market, providing RY with a near-oligopolistic position that insulates it from the kind of fierce competition seen in the U.S. market. This regulatory environment, while strict, actually enhances stability, as Canadian banks have consistently proven more resilient in times of crisis compared to their American counterparts. RY benefits from this structure with persistently high returns on equity, which outshine most U.S. banking giants. The bank is also steadily expanding its U.S. footprint, unlocking new growth opportunities while reinvesting profits back into its core businesses. Banking, a foundational pillar of the economy, isn’t going away—and within this essential industry, Canadian banks stand out for their quality and consistency. RY sits at the top of this group, offering long-term stability, impressive profitability, and limited downside risk due to its entrenched market leadership.

Royal Bank of Canada (RY) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held RY at the end of the fourth quarter which was 22 in the previous quarter. While we acknowledge the risk and potential of RY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.