The rotation toward value stocks and away from hyper-growth options is underway. Indeed, right now is a very interesting time to be an investor. That’s partly because we could see a period of time where growth outperforms value. Such a scenario hasn’t played out for more than a decade.
Among the companies I think provide the best value right now are Manulife (TSX:MFC)(NYSE:MFC) and Dream Industrial REIT (TSX:DIR.UN). Here’s why investors may want to give these stocks a look.
Top value stocks: Manulife
In the world of insurance, Manulife is certainly a behemoth. This Canada-based insurance company has significant operations domestically. However, this company is also growing its presence internationally in a big way.
Specifically, Manulife’s presence in high-growth Asian markets has made this insurance player a top pick of mine for some time. From a growth perspective, there’s a lot to like about how Manulife is positioned.
That said, on a relative value basis, Manulife is cheap — very cheap. Compared to other peers in the financials sector, including Canada’s largest banks, Manulife trades at a rather steep discount. Right now, investors can pick up shares of Manulife stock for only 7.5-times earnings. Try finding that anywhere on the market.
Additionally, this company has a rather juicy dividend yield of 5% at the time of writing. What’s not to like?
Dream Industrial REIT
Another company with a dirt-cheap valuation and an attractive dividend yield is Dream Industrial REIT. Indeed, this stock has been a top value pick of mine for some time. With fundamental metrics such as those this company has, it’s easy to see why.
Dream Industrial’s 4.3% dividend yield is made even more sweet by the company’s price-to-earnings multiple of only 6.2 times. This company’s business model, based on high-quality industrial real estate, provides cash flow stability that’s simply very hard to find right now. Accordingly, long-term investors may look at this company’s valuation and scratch their heads.
Bottom line
Both Manulife and Dream Industrial tick a number of boxes I look at. When thinking long term, companies like these with real, growing earnings are enticing. Factor in a rock-bottom valuation and otherwise attractive business models with the potential for growth, and that’s the trifecta most investors are looking for.
Thus, for those with a truly long-term investing time horizon, Manulife and Dream Industrial REIT are great picks. These companies are atop my watchlist right now. Over the coming decade, I think these two stocks have the ability to outperform.
