Growth investors have ruled the day for quite some time. Indeed, over the course of the past 15 years, investors who have remained steadfast in their belief that tech stocks will outperform have done just that, with most investors outside of a few growth stocks seeing significant outperformance over this time frame.
That said, value-conscious investors do appear to be having their day, with a number of top defensive stocks outperforming their growth counterparts of late. While it may be too soon to call a full rotation toward value stocks and away from growth as underway, I think that there’s good reason why some investors may choose to rotate into key defensive stocks at this point in time.
Here’s one idea for investors looking to do just that.
Image source: Getty Images
Manulife
I’ve been pounding the table for quite some time on Manulife (TSX: MFC), without much in the way of any meaningful success until recently.
Indeed, looking at the stock’s chart above, it’s clear that investors have really only caught on to Manulife’s upside potential over the course of the past 18 months or so. Over this time frame, MFC stock has more than doubled as investors sought to increase exposure to companies that have more defensive business models, given all the turmoil we’ve seen play out of late.
Manulife’s rock-solid balance sheet is supported by a very stable business model built on the insurance and wealth management business. As one of the largest insurers in Canada, with a significant presence in the U.S. and Asia, Manulife has seen robust organic growth over time. But as the company has expanded into Asia, its growth prospects have improved, and investors are catching on, as evidenced by these recent moves.
Fundamentals speak volumes
Manulife’s robust fundamentals were on full display this past quarter when the company reported record-breaking new insurance business results, with Manulife’s annualized premium equivalent sales rising 37% year over year. The company’s Asia segment stood out as the key driver of these results, rising 7% compared to the same quarter a year prior, with Manulife’s global wealth management business also seeing a revenue increase of 13% to more than $1 billion.
Now, the company did take a hit due to increased provisions for credit losses and some weather-related events, which hurt net income overall. However, most investors in the market appear to have looked past these concerns and view the company’s growth potential as robust (as I do).
Accordingly, this is a top stock I think can outperform for some time to come. Throwing in Manulife’s robust 4% dividend yield and track record of dividend growth, investors really don’t have any reason not to consider this defensive gem right now. At least, that’s my view.
