Power Financial Corp (PWF.TO) Buy, Sell or Hold

Power Financial Corp (PWF.TO)

36.31

-0.00 (0.00%)

as of Feb 19, 2020, 9:00:00 pm Market Open.

229 watching

DON'T BUY

It is a well established business. It is diversified. There is the wealth management business. The dividend is safe. The broad mutual fund business is under pressure. Buy it for yield but not for growth. See Canadian banks.

DON'T BUY

They have an emerging robo-advisor business among their other businesses, GWL and Investors Group which are sluggish growers. Unless something macro in the insurance space (interest rate hikes) or an acquisition happens, PWF will simply grind along. Mutual funds are stagnating or declining (Investors Group charges very high fees). Safe dividend, but he doesn't see much capital appreciation here.

HOLD

The Power franchise has had some challenges. The dividend is safe and management knows they need to make some changes. The Investor's Group side is under competitive pressure. With a couple of moves the company value could increase sharply. He would continue to hold. Yield 6%.

BUY

POW-T vs. PWF-T. Great West Life is the underlying company that supports both of these stocks. They are basically the same price. POW-T trades at a discount to GWO-T. You need to believe in GWO-T to own these two companies.

COMMENT

Pays a good dividend. Their underlying business insurance and investments, which have been under pressure, though good long-term. Stable long-term stock, but there will be short-term challenges. Averaging down isn't a bad idea.

COMMENT

Some people put more of a premium on Power Corp than Power Financial. Longer term, Great West Life is probably a sustainable investment. Mutual funds are under increasing competition. He leans slightly toward Power Corp, but Power Financial has a slightly enhanced dividend. Both dividends are well covered. Future dividend hikes will depend on how they position themselves going forward, and this will take time to show up.

DON'T BUY

PWF-T vs. POW-T. The parent vs. the subsidiary. He would go to PWF-T. We saw a bit of a pull back. He prefers the banking sector even more than these. He would not step into either one.

WEAK BUY

They have insurance and investment groups with assets into Europe as well. He likes their yield over 6%. He is interested in this again. With the recent pullback, there is now less risk.

TOP PICK

They had a negative Q3 on their Pargazi contribution but their main business like Great-West Life and Investors Group were very solid. Very defensive name . Pays a very generous 6.7% dividend trading at 7 1/2 times earnings. Safe dividend and growth of 6%. If the market goes against you, something not to worry about. (Analysts’ price target is $33.29)

COMMENT

POW or PWF for income? Owns PWF for the yield. Neither stock has done much. PWF owns Investors Group and GWL, a solid insurance company. IG had to disclose their fee structure, which was a negative, but is now slowly improving. You can own PWF for the yield, but there's been little price movement. POW owns PWF. The discounts to NAV are wide; she's unsure what the catalyst will be to narrow that. Both dividends are safe.

DON'T BUY

Investors may be expressing frustration with some investments. This one has a large portion tied to the insurance business as well as the wealth management business. Investors have to know what is the catalyst here. 70% of cash flows come from Great West Life. The quality of earnings is driven by tax cuts and relaxed actuarial assumptions. This stock will not oscillate much but you will see a sustainable dividend.

SELL

Model price is $45.06. 54% upside but there is no catalyst for this stock to get moving. It is dead money. If it is trading below its EBV -5, there is something wrong with its balance sheet and this one is too big relative to its earnings. The regulators are really rough in the financial industry. Use your tax loss.

HOLD

It has some similarities to ENB-T. The dividend is seductive. Investors are wondering where the growth is going to come from. There have been better places to park capital for share price appreciation. He prefers BCE-T to this one [mentioned by caller].

DON'T BUY

The 5.6% yield is attractive, but he sees limited upside. Great West Life and Investors Group are struggles for them, and those troubles won't go away soon. Besides the yield, is there a reason to own this?

DON'T BUY

He owned Power Financial years ago and was a great holding up to the financial crisis. Since then it has gone sideways. He keeps waiting for a catalyst to jump start it. They own Great West Life and Investors Group, but within the life insurance group they bought a US insurance company that has not been successful. He would prefer Sunlife (SLF-T).

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Power Financial Corp (PWF.TO)