Manulife Financial (MFC.TO)

This is not a bad time to consider insurance stocks. There is expanding life expectancy, which is good for the lifecos. He would favour Power Financial (PWF-T), but this company and Sun Life (SLF-T) are both good strong companies. They won’t benefit in a significant way until investment returns improve.

(A Top Pick Jan 7/15. Down 8.6%.) Has admired their restructuring since the financial crisis. They de-risked it and changed their product lines to be less market sensitive. They are expanding fairly aggressively. Current price is a compelling place to start to Buy. Basically trading at BV currently.

(A Top Pick Jan 9/15. Down 3.89%.) He is still buying this. If the yield curve can become more normalized, this will be a beneficiary in Asia.

The story remains the same. They are in the business of getting premiums, investing all that money and then eventually paying claims. It is harder when bonds pay 1.5%. They are now buying long term assets like real estate, but they find it hard with so many other investors buying in that space.

He owns MFC-T and PWF-T. MFC has better exposure to higher interest rates. He marginally prefers MFC-T, but you could go with either one.

You play insurance for an interest rate increase. We have been waiting 10 years and have finally got a .25% interest rate lift. Thinks interest rates, beyond a 6 month period, are probably going to go higher. Insurance companies will benefit from this and this is a good one to own. An interesting global play that you can buy domestically in Canada.

A great stock going into the financial crisis, and found itself over leveraged and got crushed. It has come out of that, but deleveraged itself just as interest rates were about to go down, and it might benefit from that. His favourite is Sun Life (SLF-T).

He likes Canadian companies that have growth exposure a broad. This one is very big and growing very rapidly in China. Recently struck a deal with a Chinese financial institution that they can distribute their products through their systems. Their basic business in Canada is doing well and he feels the US is picking up. Dividend yield of 3.34%.

Interest rates are a factor, but a bigger driver to the story is really the asset management side. They have really bulked up in this area, and it gets a tremendous amount of fund flows in. What you have to concern with is how the equity markets do. Dividend yield of 3.3%. From a dividend and a dividend growth perspective, this looks pretty good.

This company should be performing a lot better considering that 45% of their revenue comes from the US and they have a pretty good revenue line coming out of Asia. This is a sort of Hold in his portfolio, and he hopes it is going to benefit from a rising rate environment. It could easily be replaced in his portfolio with something else, when he finds something else.

Thinks this is a hold for 2 or 3 years. His model price is $27.34. He will watch to see how a rate increase will affect financials. He would Buy and Hold this, but would love to have it back at $18.80.

It bottomed when the market did so. It is forming a nice little triangle. It is outperforming the market and is showing signs of a nice recovery. It should be seasonally strong from January to April.

Prefers Sun Life (SLF-T) because it has a little bit higher dividend profile, and their growth rate seems to be a little bit more diversified. Likes the lifecos over the banks at this time, because of the rising interest rate environment, where they tend to benefit a little more.

Feels very good about lifecos. Prefers them to the banks. Lifecos will profit a lot when interest rates go up. Of the 3 major Canadian lifecos, this is his least favourite. Prefers Sun Life (SLF-T), followed by Great West Life (GTO-T) and then this. In the financial crisis, this company almost went down because of their exposure to the stock market and interest rates. Since then, they have deleveraged themselves, so they don’t have the same leverage, but he feels they have been taken down too much.

Great West Life (GWO-T), Manulife (MFC-T) or Sun Life (SLF-T) for the best upside? That’s a tough question, because he likes all 3. Insurance companies will do well in the economy he sees going forward. Lifecos have a little bit more torque on the upside with rising interest rates. Right now this would be his favourite.