For investors who aren’t aware, there’s a capital rotation underway right now. Investors are increasingly picking value stocks over their growth counterparts. For many, this trend is a long time coming. After all, growth has outperformed value for more than a decade now.
However, those with a truly long-term investing mindset know that valuations matter. In this environment of uncertainty, it’s understandable why investors want to take a more defensive approach.
Accordingly, let’s dive into two top Canadian value stocks to consider buying right now.
Top value stocks: Manulife
Manulife (TSX:MFC)(NYSE:MFC) is among the three dominant life insurers within the domestic Canadian market. This company also boasts fast-growing operations in many Asian nations as well as the United States. The company declared that it earned record profits in 2021 as Q4 net income rose 17% to $2.08 billion.
This Toronto-based insurer stated that its earnings attributable to shareholders hit $7.1 billion last year. That’s a 21% increase from $5.87 billion in 2020. For the three months that ended Dec. 31, the company noted it earned $1.03 per diluted share. That’s up from $0.89 per share, or $1.78 billion, a year prior. Also, core earnings came in at $1.71 billion, or $0.84 per share. These results generally exceeded analyst expectations overall.
One of the reasons for Manulife’s strong outlook right now goes past its previous strong numbers. Looking forward, many investors like the fact that Manulife benefits from a rising interest rate environment. Higher fixed-income yields, and the ability to raise premiums make for an inflation hedge many defensive investors may want to consider right now.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) is a leader in the convenience store and fast station business. This company’s operations span a range of countries in North America and Europe. Indeed, Couche-Tard’s focus on acquiring market share across many global markets is one of the key reasons many long-term investors like this stock.
Unfortunately, acquisition volumes have slowed due in part to rising valuation multiples for potential targets. Couche-Tard also let go of a couple acquisitions after shareholder outcry.
However, there’s plenty of growth to go around with the company’s existing business. Couche-Tard is focusing its attention now on investing a $100 million Circle K Venture Fund in startups. These start-up organizations are basically those that are creating forward-looking solutions targeted to improve customer experience, thereby focusing on efficiency enhancement and making daily life easier for its customers.
Again, like Manulife, Couche-Tard is a company that’s uniquely positioned to battle inflation. This company’s businesses provide goods and services with stable margins. Additionally, the company has pricing power, or the ability to pass on increases to customers.
Those looking to build a value portfolio ought to take a look at these two top stocks right now. They’re both trading at attractive valuations, with meaningful upside in this inflationary environment.
