Manulife Stock’s Blistering Rally Is a Long Time Coming (and it’s Not Over Yet)

Manulife Financial (TSX:MFC) stock could be headed for another leg higher going into H2 2024.

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Don’t look now, but long-time laggard Manulife Financial (TSX:MFC) is finally starting to pick up speed, and it’s about time. The Canadian insurance firm has done a fantastic job of navigating various macro headwinds, with the latest (first) quarter witnessing considerable year-over-year growth in sales and net income.

Indeed, Manulife seems to be back. But the big question is whether the latest rally is worth getting behind. As you may know, chasing the heat is not the best idea for value investors.

That said, if the recent results, fundamentals, and new growth trajectory have improved markedly above your expectations, it can make sense to buy a stock after a substantial run, provided you’re willing to buy more shares on a near-term pullback. Indeed, sometimes rallies tend to overextend, warranting a big correction.

Manulife stock’s run could extend

When it comes to shares of MFC, they’re starting to come off their recent multi-year highs, just shy of $37 per share. Now down over 5% from their peak, mostly for reasons that do not affect the long-term narrative, I view the “half correction” of sorts as a great entry point for new investors who may have missed the recent run.

For the past year, MFC stock is up more than 34%, and over the last two years, shares have shot up more than 57%.

By Manulife standards, that’s an incredible run, and one that may be far from over as the company looks to go full steam ahead. In addition to recent strength across the board, the firm is moving forward with what it calls an ordinary share repurchase program.

Undoubtedly, management is committed to putting money right back into the pockets of its loyal shareholders now that it’s finally starting to glimmer after many years of navigating headwinds that have caused the stock to flatline for a number of years.

Manulife is doing many things right. It’s a top-value stock right now!

In addition, Manulife has done a great job of embracing new technologies. The firm is very much involved in the so-called digital transformation. As such efforts begin to lift overall fundamentals, I’d not sleep on the name. Indeed, the latest retail wealth platform stands out as just one of many “modernization” moves that could help Manulife continue to add to its recent strength.

While life insurance and wealth management may be fickle at times, I think MFC stock represents a bargain at current levels if you believe Canada’s economy is looking up from here. With the first rate cut in the books and inflation coming back down, perhaps consumers will have more cash on hand for various insurance and wealth management products.

Additionally, the firm’s Asian business stands out as a potential needle-mover as the region rises out of a slump. Asia still represents a major growth market and one that may still be discounted by most investors and analysts, with the stock going for just 14.85 times trailing price to earnings. The 4.52% dividend yield is a wonderful bonus, too!

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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