The Globe and Mail reports in its Friday, Aug. 14, edition that NexGen Financial's Jeff Young likes Industrial Alliance Insurance and Financial Services ($43.07). The Globe's Tim Shufelt writes that Mr. Young says he is a bit off theme with his call on Industrial. Mr. Young says, "Its revenue
comes from Canada, and
investors are looking more for
presence outside of Canada."
While being domestically concentrated
is a knock against Industrial, the
discount investors have applied
to its stock is excessive,
says Mr. Young.
The persistence of low interest
rates have weighed on the sector
as a whole, which is one of the
few positively exposed to rising
rates, as insurers derive profits
from reinvesting insurance premiums.
Sun Life Financial and
Manulife Financial
have revenues denominated in
non-Canadian currencies helping
them out.
Betting on those stocks, however,
is a "pretty crowded trade,"
says Mr. Young. Both trade at
about 12.5 times forward earnings.
Industrial,
by contrast, trades at 10.3
times.
Mr. Young says, "It's a stock we've followed and
not bought on valuation, but
now it's heading back to the lower
end of its range." He added to his position
on July 23 at $40.67.
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