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Should You Invest in Manulife (TSX:MFC)?

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In the weeks following the pandemic-induced crash, investors began to identify a series of bargain-buys. In short, these are top-performing stocks that were trading at temporarily, highly-discounted rates. Investors who managed to invest in those stocks are now seeing handsome double-digit gains.

One stock that is still discounted and has largely evaded the spotlight is Manulife Financial (TSX:MFC)(NYSE:MFC).

Is Manulife a good fit for your portfolio?

Manulife is Canada’s largest insurer. That’s a whopping claim to make — and even more significant when that claim is quantified with the fact that one in three Canadians are considered clients of the insurance behemoth. But is that enough to invest in Manulife?

That level of saturation does provide the company with a steady base of revenue (more on that in a moment), but more important, it means that further growth will need to come from foreign markets. More specifically, Manulife turned to markets in Asia.

Manulife’s entry into Asia consisted of exclusivity agreements with regional partners in different markets. This is important to note because across Asia as there is a new generation of customers fed on by an explosion in wealth. This allowed the company to rapidly spin up a presence in multiple markets. which led to a series of better-than-expected earnings reports.

With the onset of the COVID-19 pandemic and related lockdowns, the availability of those partners to conduct business, and the stream of potential customers dried up. Products such as those that Manulife offers can quickly be demoted as “nice-to-have” options during a strained financial period.

Fortunately, as Asia was the first region to shut down, it was also the first to reopen, which was evident in the company’s recent quarterly update for the third fiscal quarter.

Manulife’s Q3 update

Manulife provided an update on the third fiscal earlier this month. During that most recent quarter, Manulife reported a net income of $2.1 billion, representing a whopping $1.3 billion improvement over the same period last year. Core earnings for the period came in at $1.5 billion, representing a 6% drop over the same period last year.

The decrease in core earnings was attributed to a variety of factors, chief among those was the impact of COVID-19. Manulife’s new business value came in at $460 million in the quarter — a 14% drop over the same period last year.

Looking at individual segments, Manulife’s Asia new business value dropped 16% in the quarter to $365 million. The U.S. segment’s new business value dropped by 38% over the prior year. Canada’s new business value offset those losses. The segment surged 31% over the prior period to $67 million.

Should you buy?

So far in 2020, Manulife is trading down 15%. This is significantly lower than the overall market. This also suggests that the recovery wave we’ve seen in recent weeks hasn’t fully impacted Manulife yet. Fortunately for prospective investors, there are signs that the wave is approaching. In the past month, Manulife’s stock has shot up over 15%.

Even with that recent surge, Manulife still trades at an impressive (and discounted) P/E of just 8.40.

That might be reason enough to consider investing in Manulife, but there’s still more. Manulife currently offers investors an appetizing dividend with a 4.96% yield. This makes the stock an appealing option for growth and income-seeking investors alike.

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Fool contributor Demetris Afxentiou owns shares of Manulife Financial.

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