Manulife Financial (MFC.TO)

Risks or benefits of rising or falling interest rates with regards to this company are diminishing. Biggest growth factor for them is their ability to grow earnings and profitability on an international basis. Good management team. Thinks they can continue to grow their earnings at a fairly decent pace and you’ll start seeing their dividends growing at a decent pace.

A 2013 story. The lifecos will benefit disproportionately well in the movement in interest rates. Also, they benefit from the dropping CAD$. There are a host of things that work well for the lifecos. The factors that caused MFC to outperform in 2013 could persist in 2014.

(A Top Pick Jan 21/13. Up 56.45%.) He would stay Long on insurance companies. This one is the insurance company that seems to be most exposed to a falling Cdn$. If you don’t own, consider buying on a little bit of a pull back.

Doesn’t see many of the Canadian insurers increasing dividends until they get more clarity on some of the regulatory rules with regard to capital. Cut their dividend in 2008 so probably won’t raise it again until they are very sure they are going to be able to maintain it. He is getting more positive on the Canadian insurance space; however the market has run these companies up in expectation of higher rates. It will have to be their core business that propels the next move in the stock. He would be cautious but thinks you should own some insurance in your portfolio. Prefers Sun Life (SLF-T), which has a better dividend yield and a little better stability.

Closed at $21.59 and he has a model price of $24.36, a positive 13%. He thinks it runs to $23.66. If it comes back to the $19.40 level, he would certainly Buy.

Sell or hold for more upside? When you see a chart like this one has, there is always a temptation to become a trader. There is probably more upside in this stock. Has been crushed because of lower interest rates. His view is there will be higher interest rates and this is very well-positioned, especially in Asia.

Manulife (MFC-T) or Sun Life (SLF-T)? Low interest-rate environment that we had been in for the last 3-4 years has been terrible for insurance companies. We are now in an environment where everybody expects bond yields to go up, which can only be positive for life companies going forward and it is expected to see better earnings on their portfolios. Feels this one probably has more leverage as it has more international exposure and a little bit more scale.

On her watch list. Will benefit from rising interest rates. Likes their positioning in China and the Far East. Good growth avenue for them longer-term. Outperformed the banks last year. She would like to get it a couple of dollars cheaper.

Benefits from higher rates. 11.5 times earnings. He likes it. Would like to buy it under $20. He buys half now for new clients and hopes for a market pull back.

More growth in Manufacturers Life (MFC-T) or Sun Life (SLF-T)? These are both global businesses with large exposure to different parts of Asia. Both are international companies and he likes them both. Still sees upside as well as dividend increases in both companies over the next 2-3 years.

Positive on the sector. This one is still a little more speculative than other names. As interest rates go up and stock markets continue to act well, it will be positive for MFC. See today’s Top Picks for his preferences.

If you are going to own one, prefers MFC-T.

Very strong balance sheet. If you own, you may want to diversify a bit, keeping half of this and consider going into a U.S. Bank. Thinks the US currency is going to rise and feels that the US is going to grow a little faster than Canada. His top US bank holding is J.P. Morgan (JPM-N).

(A Top Pick Jan 30/13. Up 15.3%.)

They have a benefit from higher rates but they have 35% growth in Asia, so you are going to see earnings growth. Buy on weakness at $19. Will raise dividend at the end of 2014.