IGM FINANCIAL INC. $55 - Toronto symbol IGM

IGM FINANCIAL INC. $55 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 252.1 million; Market cap: $13.9 billion; Price-to-sales ratio: 5.4; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www. igmfinancial.com) is Canada’s largest independent mutual fund company. Power Financial owns 58.7% of IGM.

Rising stock prices continue to spur mutual fund sales and the value of its clients’ holdings. As of September 30, 2013, IGM had $126.0 billion of assets under management, up 5.6% from $119.3 billion a year earlier. The company’s fee income rises and falls with the value of the securities it manages, so its revenue and earnings gain when the price of these assets rises.

In the third quarter of 2013, earnings rose 3.8%, to $193.4 million from $186.2 million a year earlier. Per-share earnings rose 5.5%, to $0.77 from $0.73, on fewer shares outstanding. Revenue increased 5.3%, to $667.5 million from $634.1 million.

For all of 2013, IGM’s earnings should improve to $3.07 a share from $2.94 in 2012. The stock trades at a reasonable 17.9 times that forecast. The $2.15 dividend yields 3.9%.

IGM Financial is a buy.

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