Montreal bank (TSX: BMO) has so far been the dream of an investor in 2025 and delivers a total return of approximately 28% years to date. This exceeds the return of the Canadian banking sector of the Canadian banking sector (as measured by the BMO Equal Weight Banks Index ETF) and the return of 18% of the wider market (using the ISHARES S&P/TSX 60 Index ETF Like a benchmark).
BMO shares are better than performing, but how long can it take?
There is no doubt that this year is a year for BMO. In fact, the 10-year compound annual growth rate (CAGR) from 2014 to 2024 is around 12%, a solid long-term efficiency for a large financial institution. But although this momentum is impressive in the short term, it also raises an important question: does the stock are overheated?
Investors must think that periods of rapid growth are often followed by stagnation or pullbacks. The fact that BMO rises today does not mean that tomorrow’s return does not match. Those who jump now risk the risk near the peak of a performance cycle.
Timing is important: BMO’s roller coaster ride since the pandemic
To emphasize how timing can influence your return, consider this: BMO has around 140% between the bottom of Covid in March 2020 and the peak in March 2022. That run was really extraordinary. But what happened afterwards? From March 2022 to September 2024, the stock supplied one Negative CAGR of around 5%.
This illustrates an important truth – investors are often better off buying quality shares such as BMO during periods of UnderPerformance, not if there is a lot of optimism. Although it is easy to be swept in contemporary Bullrun, history shows that future return tends to normalize after a sharp rally – and sometimes disappoint.
Is BMO -Stock expensive at the moment? All signs indicate “yes”
With approximately $ 174 per share, BMO is now trading at a price-gain ratio (p/e) of almost 15th highest rating since 2010. Although some could claim that this has been justified by strong income (adapted profit per share (EPS) has risen 14% to date), that growth rate is far above the bank of the bank. In the past decade, the adapted EPS growth rate was only 3.9% due to three years from -11% to -18% EPS fall.
For long-term shareholders who have purchased at lower levels, BMO remains a solid, dividend-paying blue chip. But for new investors? The current appreciation looks rich. A withdrawal to the range of $ 130 – $ 146 would offer a much more reasonable access point with a better safety margin.
Recession risks and resilience in the long term
Bank of Montreal, founded in 1817, became the seventh largest bank in North America with $ 1.4 trillion in assets and serves 13 million customers worldwide. The activities are well diversified: 34% of the turnover comes from Canadian personal and commercial banking, 29% of American personal and commercial banking, 20% of capital markets and 17% of Wealth Management.
However, BMO is not recession -resistant. In the last two economic decline – the 2020 Pandemie and the financial crisis of 2008 – the stock and 67% and 60% respectively fell from peak to valley. The best time to buy BMO is often when fear is high, not when enthusiasm dominates.
Investor collection meals
If you are a momentum trader, there can still be a profit in the short term. But for value -oriented investors who are looking for safety and growth in the long term, this is probably not the ideal moment to buy. History is clear: BMO shares perform best when they are purchased in times of weakness, not in strength.
In short, it is too late to buy BMO shares now – but it is worth keeping on your watchist for when the next decline strikes.
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