IGM FINANCIAL INC. $45 - Toronto symbol IGM

IGM FINANCIAL INC. $45 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 257.5 million; Market cap: $11.6 billion; Price-to-sales ratio: 4.2; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.igmfinancial.com) reported that on November 30, 2011, it had $120.2 billion of assets under management. That’s down 4.3% from $125.6 billion a year earlier.

The company’s clients sold more investments in response to recent stock-market volatility, and share prices were lower than a year ago; these were main reasons for the drop.

IGM’s fee income rises and falls with the value of the mutual funds and other securities it manages, so the company’s revenue and earnings suffer when the value of these assets falls. Still, low interest rates will probably spur investors to shift from fixed-income investments to equity-based mutual funds over the next few months.

IGM Financial is a buy.

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Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

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Value Stocks

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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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