Fast-rising stocks can still be safe if they’re backed by strong fundamentals, like consistent earnings growth, manageable debt, and solid market positioning. For instance, over the past five years, companies in the S&P 500 with earnings growth above 20% per year have outperformed the broader index by around 15%. As long as a stock’s rise is tied to real financial performance rather than pure speculation, it can offer both growth and stability. Just remember, a little research can go a long way in making sure the stock’s rise is sustainable! Which is why today, we’re digging into one winner among fast-rising stocks.
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IAG
iA Financial (TSX:IAG), also known as Industrial Alliance, is one of Canada’s largest insurance and wealth management companies, with a history dating back to 1892. The company offers a wide range of services, from life and health insurance to investment solutions, thereby helping individuals and businesses achieve their financial goals. Over the years, iA Financial has built a reputation for its strong financial performance, with a steady increase in assets under management and a commitment to paying dividends, making it a reliable option for long-term investors. In fact, iA Financial has grown its dividend annually for the past decade, which is a good sign for income-focused investors.
What sets iA Financial apart is its diverse portfolio of products and focus on innovation, including expanding its digital platforms to better serve clients. The company has made strides in incorporating tech-driven solutions, such as digital insurance offerings and robo-advisory tools for investments. Whether you’re looking for comprehensive insurance or ways to grow your investments, iA Financial provides a blend of tradition and modern solutions to help secure your financial future.
Onto earnings
iA Financial had a strong second quarter, with core earnings per share (EPS) growing by 15% year-over-year to $2.75. This growth was driven by solid business momentum, including a 15% increase in premiums and deposits, as well as a 12% rise in assets under management. Its return on equity (ROE) hit 15%, meeting the medium-term target, which is a positive sign for investors. Plus, iA maintained a healthy solvency ratio of 141%, ensuring its financial stability – all while continuing to deploy capital through acquisitions and share buybacks, including $287 million in share repurchases.
The company’s diversified business segments performed well, particularly in Canada, where both individual insurance and wealth management saw significant growth. Notably, segregated fund sales were up 53%, and individual insurance sales in the U.S. reached record levels. Overall, iA Financial’s strategic capital deployment and acquisitions, alongside strong organic growth, make it a solid performer. This performance shows the company’s disciplined execution of its growth strategy.
Looking ahead
iA Financial is definitely one to watch for investors, with its recent acquisitions showing strong growth potential. The company expanded its U.S. presence by acquiring two blocks of business from Prosperity Life Group, adding over 115,000 policies and $100 million in annual premiums. This move strengthens iA’s foothold in the Final Expense and Term Life insurance markets, thereby giving it access to Prosperity’s large distribution network of 15,000 sales agents. This deal is expected to be accretive from year one, meaning it will contribute to earnings immediately, a great sign for those looking for stable growth.
iA Financial is also growing its wealth management division, recently acquiring Laurentian Bank Securities’ retail full-service broker division. This acquisition adds over $2 billion in assets under administration and expands iA’s client base by 15,000 accounts. These strategic moves not only enhance iA’s offerings. They also increase its revenue streams, making it a diversified and solid investment choice. So, with a forward price/earnings (P/E) ratio of 9.5 and a 3% dividend yield, iA combines growth and income potential, especially as shares power upwards by 31% in the last year, making it a clear stock to keep on investors’ radars.
