IGM FINANCIAL INC. $37 - Toronto symbol IGM

IGM FINANCIAL INC. $37 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 256.1 million; Market cap: $9.5 billion; Priceto- sales ratio: 3.5; Dividend yield: 5.8%; TSINetwork Rating: Above Average; www.igmfinancial.com) is selling fewer mutual funds due to volatile stock markets. Lower share prices are also hurting IGM because its fee income rises and falls with the value of the securities it manages.

In the three months ended June 30, 2012, IGM’s earnings fell 15.9%, to $179.0 million from $212.8 million a year earlier. Earnings per share fell 14.6%, to $0.70 from $0.82, on fewer shares outstanding. Revenue declined 8.6%, to $637.6 million from $697.7 million.

IGM recently cut the management fees it charges on about two-thirds of its products. That should help it hang on to existing clients and attract new ones. The quarterly dividend of $0.5375 a share also seems safe; the annual rate of $2.15 yields 5.8%.

IGM Financial is a buy.

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One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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