TSX Stocks in the Financial Sector: Which Ones Will Outperform?

Investors battling volatility might want to snatch up financial TSX stocks like Manulife Financial Corp. and others right now.

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The S&P/TSX Composite Index was down 150 points in early afternoon trading on May 25. Meanwhile, the S&P/TSX Capped Financial Index was down just shy of 1% in the same trading session. Today, I want to look at some of my favourite TSX stocks to target in the financial sector. These equities have a shot at overperforming in the weeks and months ahead. Let’s jump in.

Here’s why I’m still loving this undervalued TSX stock

Manulife Financial (TSX:MFC) is a Toronto-based company that provides financial products and services in Asia, the United States, and around the world. Shares of this TSX stock have dropped 2.4% However, Manulife stock is still up 3.4% in the year-to-date period. Investors who want to see more can play with the interactive price chart below.

In the first quarter, Manulife reported net income attributed to shareholders of $1.4 billion – up $0.1 billion compared to the previous year. Moreover, core earnings rose 6% on a constant currency basis to $1.5 billion or 11% to $0.79. Asia APE sales rose to $1.2 billion compared to $1.1 billion in the first quarter of fiscal 2022. Meanwhile, Asia’s new business value hit $372 million, which was up marginally from the prior year.

Shares of this TSX stock currently possess a very favourable price-to-earnings ratio of 8.7. Manulife offers a quarterly dividend of $0.365 per share. That represents a strong 5.7% yield.

Don’t sleep on this under-the-radar equity that could outperform expectations

Intact Financial (TSX:IFC) is based in Toronto and provides property and casualty insurance products to individuals and businesses in North America, the United Kingdom, and around the world. This TSX stock is down 1.9% over the past month. Its shares are up 2.1% so far in 2023.

This company unveiled its first quarter fiscal 2023 earnings on May 10. Intact reported 4% growth in operating premiums written. Meanwhile, net operating income attributable to common shareholders also jumped 4% to $537 million. Operating direct premiums written suffered a slide in its U.K. and International segment while Canada and the U.S. delivered operating direct premiums written growth of 4% and 15%, respectively.

Intact Financial last had an attractive P/E ratio of 15 at the time of this writing. Meanwhile, it currently offers a quarterly distribution of $1.10 per share, which represents a 2.2% yield.

One more TSX stock that could make you rich this decade

Goeasy (TSX:GSY) is the third and final TSX financial stock I’d look to snatch up in the final days of May. This Mississauga-based company provides non-prime leasing and lending services under the easyhome, easyfinancial, and LendCare brands to Canadian clients. Its shares have surged 15% over the past month. The stock is still down 1.2% in the year-to-date period.

In Q1 2023, goeasy achieved loan growth of 58% to $124 million. Moreover, the company reported total revenue of $287 million – up 24% compared to the previous year. Adjusted diluted earnings per share (EPS) climbed 14% to $2.72.

This TSX stock possesses a favourable P/E ratio of 10. Goeasy also offers a quarterly dividend of $0.96 per share, representing a 3.6% yield. The company has delivered nine consecutive years of dividend growth, which makes this promising growth stock a Canadian dividend aristocrat.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has positions in Goeasy. The Motley Fool recommends Intact Financial. The Motley Fool has a disclosure policy.

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