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Manulife Financial Corporation (MFC)
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Sun Life Financial Inc. (SLF)
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Power Corporation of Canada Subordinate Voting Shares (POW)
Q: Hi 5i
I have done well with all 3 of these but I am concerned that lower interest rates will cause them to pull back. Would you agree? According to G&M site, there isn't a lot more upside with avg. target prices about $31 MFC, $41 POW, AND $74 SLF. All 3 are close to 70 RSI which I use as a warning sign. I would appreciate your thoughts and if I were to sell one, which would you suggest? Now that MFC has finally gone above $28, do you think $30 will be an exit price for a lot of investors who are tired of the $24-$28 trading range?
Thanks, Greg
I have done well with all 3 of these but I am concerned that lower interest rates will cause them to pull back. Would you agree? According to G&M site, there isn't a lot more upside with avg. target prices about $31 MFC, $41 POW, AND $74 SLF. All 3 are close to 70 RSI which I use as a warning sign. I would appreciate your thoughts and if I were to sell one, which would you suggest? Now that MFC has finally gone above $28, do you think $30 will be an exit price for a lot of investors who are tired of the $24-$28 trading range?
Thanks, Greg
5i Research Answer:
Generally, insurers can do better with rising rates, but that was not really the case in 2022. Investors worried too much about inflation. Now, with inflation abating, we would expect these three to do OK. We would not worry too much about target prices. Analysts tend to 'follow' prices down and turns can easily be missed. Based on consensus, all are expected to show some earnings growth this year. If rates decline, dividend investors could still drive prices higher. POW would be our least favourite here and it would be our choice to sell if one is going to go. With MFC at only 8X earnings and some of its 'issues' abating, we think over $30 is fairly doable. Rather than an exit, this level might be a 'break out' if it comes with volume.