Looking for a bounce from Manulife

Apr 30th, 2010 – Comment

Your interest in buying in at the $17.33 level does have some merit but you’ll have to watch May 6 when MFC reports their Q1 results.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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MANULIFE1

Hi Lou,
Can you decipher what’s with MFC as of late – markets are moving up and Manulife is moving down? Is it a good buy and hold? What would be the best entry point? I am aiming for a 3% dividend yield – which means enter when it fall to $17.33 or below if it does continue to fall. Then again, perhaps it’s not a good idea to catch a falling knife (albeit a slow one). 
Happy Capitalism it is.

David

 

Hi David,

The simple answer to your question of what has happened to Manulife Financial Corp. ( MFC TSX) is that they have had choppy earnings in the last year  and in August of 2009 they cut their dividend in half to $0.13/share. These are not the sorts of events that get investors stoked about buying shares. I would say that MFC is not a buy and hold stock at this point.Your interest in buying in at the $17.33 level does have some merit but you’ll have to watch May 6 when MFC reports their Q1 results.

mfc

 

The three year chart paints the picture of a stock that has topped out and is now trading below its 200 and 50 day moving averages and broke below support at $20.oo then $19.50 and then at $19.00. A clear case of falling and not being able to get up. There is support in the $17.50 range so your entry point of $17.33 could prove interesting.

 

 

MFC2

The six month chart provides a good view of the the current action and the support in the $17.50 range. In addition you can see the resistance along the 200 day moving average as it bounced off $17.50 in December of 2009. The MACD is still moving lower so it isn’t suggesting a reversal at this time.

If you decide to that you want to buy into MFC before May 6th you should be watching it like a hawk and digging for every bit of information that you can. I would say that the next four days of trading will provide indicators of the markets expectations of what will be reported by MFC. Current estimates are for earnings per share of $0.50.

MFC has been trading in a down channel since mid March of this year and broke support on the lower boundaryof the channel in late April. I like your target range but go forward with caution to make sure the $17.50 support level holds. Its a matter of confirming the bottom not anticipating it.

 

MAKE IT A HUGE WEEKEND AND HAPPY CAPITALISM!

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