Attention Investors: Here’s a Tech Stock and an Insurer That Are on Sale Today

Manulife Financial Corp. (TSX:MFC)(NYSE:MFC) stands to benefit from rising interest rates, and Evertz Technologies Limited (TSX:ET) stands to benefit from strong demand.

Karen Thomas, MSc, CFA

Karen is a stock market enthusiast focused on uncovering those stocks that she believes the market has mispriced. She does this through fundamental and quantitative analysis of companies and their industries, as well as a study of future opportunities and trends. She holds a Masters degree in Finance, the CFA designation, and has over 20 years of experience in the investment management industry. Having worked at a major pension fund, as well as two leading mutual fund firms as an analyst and portfolio manager, she has solid investing expertise which she aims to share with her readers.

Published December 7, 2017 3:40 pm EST

In this market, where it seems that investors are in a very optimistic mood and willing to pay up for their investments, it is good to know that there are still some stocks that represent good value.

Here are two of these that are actually on sale.

Evertz Technologies Limited (TSX: ET) operates in an industry that is experiencing strong tailwinds — namely, the broadcast equipment industry.

A secular shift in this industry is being fueled by the transition from analog to digital, growing demand worldwide for HDTV, government mandate for digital, and the fact that broadcasters are in the process of building their infrastructure.

And as complexity in the industry is increasing, with more channels and faster bandwidth, this means that Evertz’s solutions will continue to be increasingly needed.

But the stock has languished since mid-November, declining 7% to settle at today’s price of $18.42. That’s not a huge decline, but given that the shares were already trading in the cheap territory, I view this as a good time to bulk up.

The stock trades at a P/E ratio of 19 times this year’s expected consensus earnings and 15 times next year’s.

Strong demand, as evidenced by accelerating revenue growth in the first quarter of fiscal 2018, when revenue increased 25% versus last year to $109 million, will be a catalyst for the stock. This follows a healthy, but weaker fourth-quarter revenue growth of 11%.

And Evertz has a strong balance sheet and a current dividend yield of 3.9%.

Stay tuned. The company reports second-quarter results on December 14.

Life insurer Manulife Financial Corp. (TSX: MFC)(NYSE: MFC) stands to benefit from higher interest rates in 2018.

Although the stock has performed well this year, Manulife currently still trades at attractive multiples given the improved environment expected in 2018 and its growth profile.

The company is currently seeing strong growth in Asia, where earnings increased 16% on a constant-currency basis in the third quarter, and solid performance in its wealth management segment, where the Standard Life and the New York retirement plan acquisitions will help to boost its position and growth going forward.

On the cost side, Manulife has embarked on making improvements to its operational efficiency. To this end, Manulife has achieved $500 million of pre-tax annualized cost savings in 2016, and we should expect more to come as this remains a focus for the company.

Its return on equity is on the rise, with ROE coming in at 11.7% in the third quarter compared to 10% in 2016. Of the life insurers, Manulife is making the biggest improvements to its ROE, and it remains the least-expensive stock.