Manulife Financial (MFC.TO)

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.

The recent quarter was a mixed bag, and a lot of people didn’t see the write-downs coming in the energy investments they had. Overall, that is not a big deal. Management has well repositioned this company changing its product mix to be less market related. Their expansion in Asia has been particularly strong. Dividend yield of 3.19% and he is expecting more increases to come. Probably has one of the best balance sheets in the industry. If we end up in a market with rising interest rates, insurance companies benefit.

Manulife (MFC-T) or Sun Life (SLF-T)? He likes both businesses. They are great income producing stocks to own, just like a bank, that you want to own for the long-term. Valuation is not so cheap right now that you can make a large amount of money in a short period of time. He would choose this one because the institutional money managing business of Sun Life has been doing very, very poorly.

45% of their revenue is coming from the US, giving a nice FX tailwind. Growing really well in Asia, in the US and in Canada. Cheaper than its peers. Dividend yield of 3.15%.

(A Top Pick Sept 11/15. Up 7.52%.) In September there was a lot of concern about China. As soon as this happens, people sell the stock. In reality, only about 2% of their business is mainland China, the rest being Hong Kong and Japan. When rates start to move, that will be a positive. Also, a significant amount of business outside of Canada is going to be positive on currency translation.

Prefers Sun Life given its more diversified basket of operations. Sun Life looks a little bit stronger when you look at the charting and the fact that it is trending above moving averages and starting to break out. Manulife is a fine company and there is nothing wrong with it.

The first insurance company into the far east and this is going to be a tremendous growth area for any insurance company. They cut a deal about a year ago with a major distributor of financial products which could produce great benefits for them. Higher interest rates will benefit. Between the target price and dividend yield, he can see a 19% potential return. Dividend yield of 3.07%.

He liked insurance companies a whole lot better when there was a good possibility that US interest rates were going to be raised. Higher interest rates would have helped the insurance industry quite a bit. This stock has set back to a fairly attractive level. A small dividend of a little over 3%. It has lots of upside potential. Very reasonable PE. As an investment, it will probably work out okay.

There was a bottom in September. They took a while to work through the ’08 problems. He prefers SLF-T. MFC-T will run into resistance at $22.50. It might chew threw that, but this one does not have seasonality into November.

(Top Pick Sep 15/14, Up 0.44%) International growth has been strong. They still lever somewhat to the market and are highly levered to higher interest rates, which have not increased. He still likes it. It looks fine to him.

It got beaten up pretty well. He predicts 18% growth. They say they are on track to meet their core expectations for the end of 2016.

If you own, would you averaged down on this? Dipped below $20 this week which is a decent price for it. It should have some measure of recovery. He would consider adding to this at $20 or below, in order to average down. Have very good growth prospects in Asia.

It is the only one of the three delivering good financial and operational results. But life insurance companies are not necessarily the best financials to be in. He has no lifecos because they have a difficult time in a low rate environment. He has banks.

(A Top Pick Sept 13/14. Down 6.3%.) This will benefit from higher rates. He would be a fairly aggressive buyer at this price.