RBC Capital Markets’ Global Financials Research Group added both Brookfield Corp. and Manulife Financial Corp to its “Best Stock Ideas” list.
In a research report released Thursday, the firm’s analysts said global financial stock valuations “continue to screen attractive,” adding more certainty “on the path of economic recovery (incl. credit quality) as well the regulatory backdrop, should help the shares to re-rate.”
“Since inception, our selected stocks delivered an average total return of 11 per cent (6 per cent year-to-date),” the analysts said. “Over the same period, the world financials index delivered a total return of 14 per cent (7 per cent YTD), equity markets in the U.S. 14 per cent (8 peer cent YTD), in Europe 8 per cent (5 per cent YTD) and in Canada 9 per cent (4 per cent YTD). The best performing stocks in our coverage were American Express, Beazley and Ares Management; the worst were St James Place, Element Fleet Management and Legal & General.”
Pointing to “positive overall fundamentals” and “attractive valuation,” analyst Geoffrey Kwan has an “outperform” recommendation and US$53 target for Brookfield shares. The average is US$50.96.
“We think BN’s Alternative Asset Management; Infrastructure; Renewables; Credit; Insurance; and Private Equity businesses are performing well, while we recognize their Real Estate vertical is having mixed performance, but trends are improving and, to the extent interest rates decline, this should further benefit financial results,” he said.
Touting a reduction to its long-term care (LTC) exposure from its deal with Global Atlantic as well as potential for growth in Asia and “strong” capital position, analyst Darko Mihelic has an “outperform” rating and $38 target for Manulife. The average is $34.62.
The two were added alongside Barclays PLC, Moody’s Corp. and S&P Global Inc. Brookfield Asset Management Ltd. and Sun Life Financial Inc. were removed along with St James Place PLC and Lloyds Banking Group PLC.
Other Canadian companies on the list, which now includes 24 equities, are: Bank of Montreal and Element Fleet Management Corp.